Housing data surprised on the upside, convincing markets that the Fed may decide the country can stand on its own two feet and hold off on stimulating the economy, which would have sent gold rising.
On the Comex division of the New York Mercantile Exchange, gold futures for October delivery were down 0.21% and trading at USD1,657.15 a troy ounce, up from a session low of USD1,652.45 and down from a high of USD1,670.25 a troy ounce early during the session.
Gold futures were likely to test support at USD1,652.45 a troy ounce, the earlier low, and resistance at USD1,672.55, the high from Aug. 28.
The government revised its second-quarter growth rate up two percentage points to 1.7% from 1.5%, which watered down talk the Federal Reserve will roll out a new round of quantitative easing.
Under quantitative easing, the Fed buys assets from banks such as Treasury holdings or mortgage-backed securities, pumping the economy full of fresh liquidity to drive down borrowing costs and spur recovery, weakening the dollar in the process and sending gold rising.
Housing data surprised on the upside, further convincing markets that the Fed may decide the economy can stand on its own.
The National Association of Realtors said its index of pending home sales index rose 2.4% in July, far outpacing expectations for a 1.0% increase.
Year-on-year, pending home sales rose 15.0% in July, beating out market calls for an 11.1% increase, after rising by 8.4% in June.
The data came a day in the footsteps of bullish home pricing data.
The Standard & Poor's/Case-Shiller home price index released Tuesday showed a gain of 0.5% from June 2011, the first annual increase since 2010.
Analysts were expecting the figure to contract 0.1%.
Elsewhere on the Comex, silver for December delivery was down 0.43% and trading at USD30.790 a troy ounce, while copper for December delivery was down 0.06% and trading at USD3.439 a pound.
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