Gold prices rose on Wednesday after disappointing home sales figures reminded investors benchmark interest rates in the U.S. will remain low for the foreseeable future, a recipe for firm gold prices.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at 1,284.30 a troy ounce during U.S. trading, up 0.25%, up from a session low of $1,281.00 and off a high of $1,289.00.
The June contract settled down 0.57% at $1,281.10 on Tuesday.
Futures were likely to find support at $1,277.60 a troy ounce, Tuesday's low, and resistance at $1,301.20, Monday's high.
The Commerce Department reported earlier that sales of new homes in the U.S. fell to the lowest level since July 2013 in March.
Sales on new homes dropped 14.5% to a seasonally adjusted rate of 384,000 units, lower than analysts' forecasts for a sales rate of 450,000.
The data reminded investors that the Federal Reserve plans to keep interest rates low for the foreseeable future even when stimulus programs wind down, which softened demand or the greenback, thus making gold an attractive hedge.
A stronger euro boosted gold prices as well.
The euro zone manufacturing purchasing managers’ index rose to 53.3 this month from 53.0 in March, beating expectations for an unchanged reading.
The bloc’s services PMI rose to 53.1 from 52.2 the previous month, better then forecasts for a 52.4 reading.
The recovery in Germany, the euro zone’s largest economy accelerated this month, with activity in both the manufacturing and service sector strengthening, but growth in the French private sector lost momentum.
Meanwhile, silver for May delivery was up 0.35% at US$19.428 a troy ounce, while copper futures for May delivery were up 0.21% at US$3.060 a pound.