Investing.com - Gold prices fell on Wednesday after a strong report on U.S. durable goods solidified expectations for the Federal Reserve to wind down monthly asset purchases this year and begin raising benchmark interest rates in 2015.
Fed asset purchases, currently set at $55 billion a month, weaken the dollar to spur recovery, thus bolstering gold's appeal as a hedge as long as the Fed intervenes.
On the Comex division of the New York Mercantile Exchange, Gold futures for June delivery traded at $1,302.60 a troy ounce during U.S. trading, down 0.67%, up from a session low of $1,300.90 and off a high of $1,316.90.
The June contract settled up 0.02% at $1,311.40 on Tuesday.
Futures were likely to find support at $1,265.00 a troy ounce, the low from Feb. 10, and resistance at $1,343.00, the high from March 21.
The dollar rose after the Commerce Department reported that U.S. durable goods orders rose 2.2% last month, wiping out two months of declines and surpassing expectations for a 1.0% increase.
Core durable goods orders, which exclude transportation items, inched up 0.2%, slightly below forecasts for a 0.3% gain.
The overall data indicated that economy is gaining momentum and brushing off a weather-related slowdown and cemented expectations for the Fed to wind down its monthly asset-purchasing program this year and hike interest rates the next.
The Fed's asset-purchasing program, currently set at $55 billion in Treasury and mortgage debt a month, weakens the dollar by suppressing long-term interest rates.
Meanwhile across the Atlantic, the euro continued to come under pressure stemming from dovish comments from ECB officials on Tuesday, indicating that the monetary authority is mulling policy options to stave off deflationary risks.
Also on Wednesday, a widely-watched German consumer climate gauge remained unchanged last month.
In a report, research group Gfk said that its forward-looking index of Germany’s consumer climate remained unchanged at 8.5 for April from March, in line with market expectations.
The weaker euro bolstered the dollar, which further cut into gold's performance on Wednesday, as the greenback and the yellow metal tend to trade inversely with one another.
Meanwhile, Silver for May delivery was down 1.08% at US$19.763 a troy ounce, while Copper futures for May delivery were up 1.36% at US$2.965 a pound.