23 April 2015
Strong U.S. Housing Data Keeps Gold Below $1,200
(Reuters) - Gold was stuck below $1,200 an ounce on Thursday, following its biggest drop in over a month, as strong U.S. housing data stoked expectations the Federal Reserve would soon hike interest rates.
Spot gold was flat at $1,186.51 an ounce by 0245 GMT, near its lowest in a week. The metal fell 1.3 percent on Wednesday, its biggest single day decline since March 6.
"While the overnight fall still leaves gold within ranges of the past month, we expect to see gold prices to resume a downtrend in the near term," said ANZ analyst Victor Thianpiriya.
"Both the macroeconomic environment and the physical market remain unsupportive of prices," he said.
Bullion took a hit after data showed U.S. home resales surged to their highest level in 18 months in March as more homes came on the market.
The data prompted many to think the Fed could raise interest rates as early as June, a move that could dent demand for gold, a non-interest-paying asset.
The dollar rose against a basket of major currencies on Thursday following the data, also weighing on gold, which tends to gain on safe-haven bids when the greenback is sluggish.
Focus will now be on more U.S. data to be released later inthe day and the Fed's policy meet later this month, as traders look out for stronger clues about the timing of the rate hike.
Markets were also eyeing the unfolding of the Greek debt crisis.
Greece can scrape together enough cash to meet its payment obligations into June, euro zone and Greek officials said on Wednesday, playing down fears of an imminent default as hopes receded of a deal with its creditors to release fresh aid.
Uncertainty over the crisis, which could lead to Greece leaving the euro zone, could boost safe-haven bids for gold.
In wider markets on Thursday, Asian shares rose despite a soft reading on Chinese manufacturing as it only whetted expectations for more policy stimulus there.
China's factory activity contracted at its fastest pace in a year in April, a private survey showed, suggesting that economic conditions are still deteriorating.
The gains in equity markets further dented demand for gold.