Gold Ends Lower On Strong Dollar, U.S. Data

(RTTNews) - Gold futures snapped a two-day gain to end lower on Wednesday, tracking rising global equity markets with investors opting for the more riskier assets. The precious metal found little support with the dollar trending higher on some upbeat economic news from the U.S. showing new home sales to have risen more than expected in August.

Gold ticked higher earlier in the day on continued geopolitical worries with the U.S. President Barack Obama calling for more nations to join the fight against Islamic militants in Syria and Iraq.

In some upbeat economic news, new home sales in the U.S. showed a substantial increase in August, with the annual rate of sales at its highest level in over six years.

Gold for December delivery, the most actively traded contract, dropped $2.50 or 0.2 percent to settle at $1,219.50 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday.

Gold for December delivery scaled an intraday high of $1,226.70 and a low of $1,216.20 an ounce.

On Tuesday, gold futures ended higher, lifted by weak global equity markets. Geopolitical concerns after the U.S. and at its Arab allies launched airstrikes on Islamic militants in Syria and a weaker dollar also helped gold steady after touching its lowest in nine months.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, edged down to 773.45 tons from its previous close of 774.65 tons on Tuesday.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 85.01 on Wednesday, up from its previous close of 84.70 late Tuesday in North American trade. The dollar scaled a high of 85.09 intraday and a low of 84.60.

The euro trended lower against the dollar at $1.2787 on Wednesday, as compared to its previous close of $1.2848 late Tuesday in North American trade. The euro scaled a high of $1.2863 intraday and a low of $1.2774.

In economic news, a Commerce Department report showed new home sales in the U.S. increase substantially in August, with the annual rate of sales at its highest level in over six years. New home sales surged up 18.0 percent to a seasonally adjusted annual rate of 504,000 in August from the upwardly revised July rate of 427,000. Economists expected new home sales to climb to an annual rate of 430,000 from the 412,000 originally reported for the previous month.

From the eurozone, German business confidence weakened for the fifth straight month in September adding to signs that the largest euro area economy is set to see a slow recovery, a survey by the Ifo institute showed Wednesday. The Ifo business climate index dropped more-than-expected to 104.7 in September from 106.3 in August. This was the lowest score since April 2013, when the reading was 104.2. Economists had forecast the indicator to drop to 106.3 in August.

Meanwhile, the European Central Bank President Mario Draghi said Wednesday that euro area interest rates are likely to remain low for a long period of time and the bank is ready to use all possible tools to bring inflation back to the 2 percent target.

"Interest rates will stay at the present level for an extended period of time because they can't go much lower than that," he said.