June 25, 2013 / 10:31 AM / 5 years ago

PRECIOUS-Gold slips as robust data boosts dollar

* Data reinforces expectations of Fed reining in stimulus

* Gold edges down after U.S. housing, confidence data

* Largest physical gold fund reports 4.2 tonne outflow

* Silver, platinum, palladium outperform (Updates prices, add details)

By Josephine Mason and Jan Harvey

NEW YORK/LONDON, June 25 (Reuters) - Gold eased on Tuesday as a raft of positive U.S. housing and consumer confidence data lifted the dollar for a fifth straight session and reinforced expectations the Federal Reserve could rein in its monetary stimulus program in the next few months.

Investors resumed selling gold and continued their shift to equities and other more risky assets after better-than-expected durable goods data mid-morning in New York.

Prices hit an intraday low of $1,271.31 per ounce following the robust consumer confidence and housing numbers.

The positive data brought an end to gold’s earlier gains after China’s central bank made assurances about liquidity risks.

Rising optimism on the strength of the U.S. economy also boosted the dollar.

Gold remains on track for its biggest quarterly loss in more than 30 years after the Fed gave the clearest signal yet that it plans to taper its $85 billion monthly bond-buying program.

Spot gold was down $5.93, or 0.46 percent, at $1,275.09 an ounce at 3:28 p.m. EDT (1928 GMT), off an earlier high of $1,288.80. It continued to underperform other precious metals, oil and copper.

“Gold seems to have lost some of its bounce,” Sharps Pixley chief executive Ross Norman said. “You’re not seeing it push back much after selling. When we do get good news, the moves are tentative.”

“We’ve also had a raft of forecasts out today which are not good for gold,” he added.

Morgan Stanley, Credit Suisse and Deutsche Bank all cut their gold forecasts on Tuesday, after similar moves earlier in the week from HSBC, Goldman Sachs and UBS.

Credit Suisse cut its gold price forecast for 2013 to $1,400 an ounce from $1,580 an ounce, while Deutsche Bank cut its price view by 6.8 percent to $1,428 an ounce and Morgan Stanley reduced its forecast to $1,313 from $1,409.

Rising U.S. bond yields signal the market expects the U.S. central bank will soon begin the long process of normalizing monetary policy and reduce bullion’s lure, Credit Suisse said.

“In a world of higher rates, the opportunity cost of holding zero coupon gold is increasingly likely to become an issue,” it said.

“With the need for tail risk protection and the need for inflation protection substantially reduced, it remains hard to see where the marginal buyer for gold will come from.”


The Fed’s quantitative easing measures, put in place to stimulate growth, have helped to drive gold to record highs in recent years by keeping interest rates low while stoking inflation fears. Reducing those measures is likely to hurt gold.

The dollar index climbed on Tuesday after data showed U.S. consumer confidence jumped in June to its highest level in more than five years, while sales of new U.S. single-family homes rose to their highest level in nearly five years in May.

Investor appetite for bullion has faded, with the world’s largest gold-backed exchange-traded fund - New York’s SPDR Gold Trust - reporting another 4.2 tonne outflow on Monday.

U.S. gold futures for August delivery fell 0.16 percent to settle at $1,275.10. July options expired without incident, traders said.

Silver was down 0.46 percent at $19.56 an ounce. Spot platinum was up 1.52 percent at $1,348.75 an ounce, while spot palladium was up 0.7 percent at $663.72 an ounce. (Editing by James Jukwey, David Goodman and Chris Reese)

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