Gold futures ease down after U.S. housing data; Fed meeting eyed

Investing.com - Gold futures eased down slightly during U.S. morning hours on Tuesday, after upbeat U.S. housing sector data added to the view that the country’s economic recovery is improving.

Gold traders now looked ahead to the Federal Reserve’s two-day policy meeting due to begin later Tuesday, as investors try to assess the central bank's attitude towards monetary stimulus.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,603.00 a troy ounce during U.S. morning trade, down 0.1% on the day.

Prices held in a tight trading range between USD1,599.20 a troy ounce, the daily low and a session high of USD1,606.00. Comex gold prices rose to USD1,610.20 a troy ounce on Monday , the strongest level since February 27.

Gold prices were likely to find support at USD1,560.60 a troy ounce, the low from March 8 and near-term resistance at USD1,614.40, the high from February 27.

In the U.S., official data showed that the number of building permits issued increased to the highest level since June 2008 in February, while housing starts rose more-than-expected, underlining the view that the country’s economic recovery is gaining momentum.

The Commerce Department said the number of building permits issued in February rose 4.6% to a seasonally adjusted 0.946 million, above expectations for a 2.3% increase to 0.925 million units.

U.S. housing starts rose by 0.8% last month to a seasonally adjusted 0.917 million, compared to expectations for an increase to 0.915 million.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.1% to trade at 82.90.

Gold prices often move inversely to the U.S. dollar, as gold becomes more expensive for buyers using other currencies.

Investors were now looking ahead to the outcome of the Federal Reserve’s policy meeting on Wednesday after data last week showing that U.S. inflation was contained left the way clear for the bank to continue its asset purchase program.

Moves in the gold price this year have largely tracked shifting expectations as to whether the Fed could bring quantitative easing to an end this year.

Meanwhile, concerns over a highly criticized bailout plan for Cyprus continued to enhance the safe haven appeal of the precious metal.

Investors remained wary amid concerns that the parliament in Cyprus could reject a bill on a bank deposit tax needed for the country to secure a bailout in a vote later Tuesday.

Earlier in the day, the government submitted a new deposit tax bill that would scrap the tax on bank deposits below EUR20, 000.

Elsewhere on the Comex, silver for May delivery dipped 0.2% to trade at USD28.82 a troy ounce, while copper for May delivery declined 0.1% to trade at USD3.425 a pound.