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Gold gains on soft housing data

Published 02/21/2014, 02:18 PM
Updated 02/21/2014, 02:18 PM

Investing.com - Gold prices edged higher on Friday after investors digested the latest in a series of hit-and-miss economic indicators, this time soft U.S. home sales, and concluded that even though the Federal Reserve remain on course to dismantling stimulus programs, it will do so gradually.

Stimulus tools such as the Fed's $65 billion in monthly bond purchases tend to weaken the dollar by driving down interest rates, which bolsters gold's appeal as a hedge.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at $1,325.40 a troy ounce during U.S. trading, up 0.65%, up from a session low of $1,316.30 and off a high of $1,327.20.

The April contract settled down 0.27% at $1,316.90 on Thursday.

Futures were likely to find support at $1,265.00 a troy ounce, the low from Feb. 10, and resistance at $1,332.20, Monday' high.

The National Association of Realtors reported earlier Friday that U.S. existing home sales declined 5.1% to 4.62 million units last month, outpacing expectations for a 4.3% drop to 4.68 million units.

In December, existing home sales were revised to a 0.8% rise to 487 million units from an initially estimated 1% increase.

Gold prices have risen in recent weeks due to soft jobs, manufacturing and other economic indicators that have prompted many investors to speculate that the Federal Reserve will gradually reduce the pace at which it tapers its asset-buying stimulus program.

Uncertainty stemming from rough winter weather and its effects on economic indicators capped gains.

Multiple winter storms have bruised economic indicators, though many believe demand for goods and services continues to improve and won't alter the Fed from winding down its stimulus tools once skies clear.

Meanwhile, silver for March delivery was up 0.73% and trading at US$21.843 a troy ounce, while copper futures for March delivery were up 0.36% at US$3.291 a pound.

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