Gold futures headed for the third drop in four sessions as a jump in U.S. new-home construction boosted the case for the Federal Reserve to raise interest rates next month.
Housing starts climbed in July to the highest in almost eight years, government data showed Tuesday, indicating the industry will pick up in the second half of the year. The dollar rose as much as 0.2 percent against a basket of 10 currencies, reducing demand for bullion as an alternative asset.
Gold fell to a five-year low in July as signs of an improving U.S. economy brought the central bank closer to raising rates, which diminish the metal’s appeal because it doesn’t pay interest
“Gold will keep reacting to the U.S. data, and today’s housing numbers gave a boost to the dollar and pushed gold down,” Miguel Perez-Santalla, a sales and marketing manager at Heraeus Metals New York LLC, said in a telephone interview.
Gold futures for December delivery slid 0.2 percent to $1,116.60 an ounce at 8:45 a.m. on the Comex in New York, after climbing as much as 0.2 percent. On Monday, the metal advanced 0.5 percent after a drop in a Fed manufacturing gauge eased rate concerns.
Prices touched $1,073.70 on July 24, the lowest since 2010.