Investing.com – Gold prices remained roughly unchanged on Wednesday, as the dollar turned positive on the back of economic data that topped analysts’ expectations, reducing investor appetite in the metal.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange fell by $0.88, or 0.01%, to $1,241.86 a troy ounce.
Gold gave up some its recent gains after soaring as much as 2% in the previous session, as the dollar bounced off lows, following the release of better than expected housing data indicating a possible turnaround in U.S. homebuilding.
Housing starts jumped 8.3 percent to a seasonally adjusted annual rate of 1.22 million units, the highest level since February, the Commerce Department said on Wednesday.
Economists had forecast activity rising to a rate of 5.8%.
The better-than-expected data underpinned a move higher in the dollar, reducing investor appetite for the precious metal.
Dollar-denominated assets such as gold are sensitive to moves in the dollar – A dip in the dollar makes gold cheaper for holders of foreign currency and thus, increases demand.
An update on monetary policy from both the Bank of Japan and the European Central Bank (ECB) due Wednesday and Thursday, respectively, also weighed on upside momentum in gold prices, amid expectations that the ECB is moving closer towards tapering its ultra-accommodative monetary policy.
Analysts expect that dollar weakness will continue to be the main driver of gold prices, however, pointed to tighter monetary policy and low inflation as potential headwinds.
“We anticipate moderately higher gold prices this year and in 2018 based mostly on USD weakness, but expect tighter monetary policies and low inflation globally to create headwinds to rallies, a stop-and-go path,” James Steel, Chief Precious Metals Analyst at HSBC said.
In other precious metals, silver futures rose 0.17% to $16.295 a troy ounce while platinum futures dropped by 0.65% to $924.25.
Copper traded at $2.710, down 0.75%, while natural gas, fell by 0.58% to $3.070.