Gold Falls as U.S. Home Sales Signal Reduced Need for Stimulus

Gold fell for a second straight day as sales of new U.S. homes in June rose to a five-year high, adding to signs of improved economic growth that may prompt the Federal Reserve to slow financial stimulus measures.

Purchases (NHSLTOT) climbed 8.3 percent to an annualized pace of 497,000 homes, the highest since May 2008, the Commerce Department said today. Gold slid 20 percent this year through yesterday, wiping $56.5 billion from the value of gold exchange-traded product holdings, after some investors lost faith in the metal as a store of value and amid concern that the Fed will ease up on bond-buying intended to spur growth.

“Every new data becomes a point of speculation for the timing of the stimulus tapering,” David Lee, a vice president at Heraeus Precious Metals Management in New York, said in a telephone interview. “The market wants some clarity from the Fed.”

Gold futures for December delivery fell 0.2 percent to $1,333.10 an ounce at 11:10 a.m. on the Comex in New York. Earlier, prices rose as much as 0.9 percent.

ETP holdings backed by the precious metal fell 2.8 metric tons to 1,971.7 tons yesterday, the lowest since May 2010, data compiled by Bloomberg show. The Fed currently buys $85 billion of debt each month.

Bullion futures are up 9.1 percent in July, heading for the biggest monthly gain since January 2012, after Fed Chairman Ben S. Bernanke said it’s too early to decide whether to begin scaling back bond purchases in September.

Silver futures for September delivery fell 0.2 percent to $20.205 an ounce in New York, heading for a second straight drop.

To contact the reporter on this story: Debarati Roy in New York at droy5@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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