Gold nurses losses after U.S. building permits, housing starts data

Investing.com - Gold prices remained lower on Tuesday, after data showed that the number of building permits issued in the U.S. rose sharply in May, while housing starts tumbled, painting a mixed picture of the U.S. housing sector.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery dipped $3.30, or 0.28%, to trade at $1,182.50 a troy ounce during U.S. morning hours.

Futures held in a narrow range between $1,181.30 and $1,187.30. A day earlier, prices rose $6.60, or 0.56%, to close at $1,185.80. Gold was likely to find support at $1,168.50, the low from June 8, and resistance at $1,191.80, the high from June 10.

Also on the Comex, silver futures for July delivery slumped 12.6 cents, or 0.78%, to trade at $15.95 a troy ounce. Silver rallied 25.8 cents, or 1.63%, on Monday to end at $16.08.

The U.S. Commerce Department said that the number of building permits issued last month increased by 11.8% to 1.275 million units, the most since August 2007. Analysts expected building permits to fall by 3.5% to 1.100 million units in May from April's total of 1.140 million.

The report also showed that U.S. housing starts plunged by 11.1% in May to 1.036 million units from April’s total of 1.165 million units, worse than expectations for a decline of 3.1% to 1.100 million.

Investors now looked ahead to the Federal Reserve’s monetary policy statement on Wednesday for any fresh indications on when it may start to hike interest rates.

Recent economic reports have indicated that the U.S. economy was regaining strength after contracting in the first quarter, fuelling speculation that the U.S. central bank could raise rates as soon as September.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.4% to 95.45 early on Tuesday, moving off overnight lows of 94.81.

Meanwhile, investors continued to monitor developments surrounding talks between Greece and its international creditors, amid growing concerns that the country could default on its debt be forced out of the euro zone.

Europe wants Greece to make spending cuts worth €2 billion in order to secure a deal that will unlock additional funds before its bailout expires at the end of June and it must repay €1.6 billion to the International Monetary Fund.

Investors were looking ahead to a meeting of euro zone finance ministers on Thursday, which was being seen as Greece's last chance to strike a deal.

European Central Bank President Mario Draghi said Monday that a Greek default would be “uncharted waters,” but added that he believes policymakers have all the tools to manage the situation.

Elsewhere in metals trading, copper for July delivery slumped 0.2 cents, or 0.06%, to trade at $2.646 a pound. On Monday, copper fell to $2.626, a level not seen since March 19, as worries over the health of China's economy dampened the appeal of the red metal.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption.