Investing.com - Gold futures dropped on Tuesday after investors shrugged off disappointing housing data that would have otherwise boosted prices and jumped to the sidelines ahead of the Federal Reserve's statement on interest rates and monetary policy due out Wednesday.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery were down 1.14% at $1,193.90, up from a session low of $1,188.00 and off a high of $1,223.80.
The February contract settled down 1.21% at $1,207.70 on Monday.
Futures were likely to find support at $1,186.40 a troy ounce, the low from Dec. 5, and resistance at $1,225.00, Monday's high.
Gold prices firmed earlier after soft U.S. housing data hit the wire, which stirred up concerns that headwinds still face U.S. recovery and may prompt the Federal Reserve to wait longer into 2015 before hiking interest rates.
Low interest rates make gold an attractive hedge to a weaker dollar.
Those sentiments quickly faded on the notion that when viewed from the long term, the U.S. housing sector continues to recover despite potholes here and there.
The Census Bureau reported earlier that the number of housing starts fell to 1.028 million units from 1.045 million in the preceding month whose figure was revised up from 1.009 million.
Analysts had expected the number of housing starts to rise to 1.030 million last month.
Building permits took a similar turn for the worse.
The Census Bureau reported that the number of building permits issued in November fell to 1.035 million from 1.080 million in the preceding month .
Analysts were expecting the number of building permits issued to fall to 1.060 million last month.
Later in the session, investors jumped to the sidelines to await the Federal Reserve's statement on monetary policy and interest rates due out on Wednesday, which sent gold back into negative territory.
Despite disappointing economic indicators here or there, the overall economy continues to improve, and many investors were betting the Fed will hint a need to further do away with ultra-loose monetary policies that have supported the yellow metal since the 2008 financial crisis.
Elsewhere, silver for March delivery was down 4.93% at $15.747 a troy ounce, while copper futures for March delivery were down 0.60% at $2.861 a pound.