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Gold falls as dollar gains on U.S. data, European murkiness

CommoditiesOct 19, 2012 01:51PM ET
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Investing.com - Gold prices dropped in U.S. trading on Friday after investors stocked up on the precious metal's hedge, the dollar, in wake of soft housing data and a lack of direction on Spain and its plans to request a bailout or not.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery were down 1.21% at USD1,723.65 a troy ounce, up from a session low of USD1,716.95 and down from a high of USD1,744.25 a troy ounce.

Gold futures were likely to test support at USD1,716.95 a troy ounce, the earlier low, and resistance at USD1,744.25, the earlier high.

A risk-off trading session sent gold falling.

U.S. existing home sales fell in September but in line with expectations, industry data revealed on Friday.

In a report, the National Association of Realtors said that home sales fell 1.7% to 4.75 million from 4.83 million in August, whose figure was revised up from 4.82 million.

Analysts had expected existing home sales to fall to 4.75 million last month.

While in line with expectations, the report stoked bearish sentiments on Wall Street and sent investors chasing the dollar, ditching higher-yielding currencies and gold in the process.

Earnings fueled the risk-off trading session even more.

Microsoft reported late Thursday that its third-quarter net income fell 22% to USD4.47 billion, which missed expectations, while revenue fell 8% on year to USD16.01 billion.

General Electric, meanwhile, reported earlier that its third-quarter net income rose 8% to USD3.49 billion, while revenue rose 3% to USD36.35, missing market expectations.

"The global economy is uncertain, and we are prepared for a variety of economic outcomes," GE CEO Jeffrey Immelt said in a statement.

"We will continue to invest to win in our markets, while aggressively managing our overall cost structure."

Search giant Google released earnings earlier than planned late Thursday, which sparked confusion, and missed estimates as well.

Uncertainty out of Europe pressured the yellow metal down as well.

Meanwhile in Europe, Spanish Prime Minister Mariano Rajoy said his government felt it was under no pressure to seek a bailout, which pushed the euro down further.

Requesting financial assistance would allow Spain to tap the European Central Bank's bond-buying program, which would lower yields in Spanish government debt auctions and ease credit conditions in the country.

Meanwhile, E.U. policymakers were wrapping up a summit in Brussels, and while hopes began to build the currency zone may be coming closer to setting up a banking union, no word on Spain kept investors in the safe-haven dollar and away from gold.

Elsewhere on the Comex, silver for December delivery was down 2.21% and trading at USD32.142 a troy ounce, while copper for December delivery was down 2.84% and trading at USD3.637 a pound.

Gold falls as dollar gains on U.S. data, European murkiness

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