Gold Futures End Lower as Traders Eye Ukraine, U.S. Data

San Francisco (July 22)  Gold futures retreated on Tuesday, as investors eyed the situation in Ukraine and as U.S. economic data pointed to continued recovery.

Gold for August delivery, the most active contract, fell $7.60, or 0.6%, to settle at $1,306.30 a troy ounce on the Comex division of the New York Mercantile Exchange.

Gold prices have marched higher in recent months amid escalating violence between Ukraine's military and pro-Russia militants in the country's east. Most recently, the crash of a Malaysia Airlines passenger jet in eastern Ukraine, widely believed by Western officials to have been shot down by pro-Russia rebels, has sparked investor interest in gold as a haven from geopolitical turmoil.

On Tuesday, pro-Russia rebels allowed a train carrying the remains of those killed aboard the Malaysia Airlines flight to leave the conflict zone and handed over the flight's black boxes to Malaysian officials.

"However, with no word from Moscow and Russia still massing troops on the Ukraine border, further sanctions are likely to be imposed," said Liz Grant, senior account executive with Sucden Financial, in a note to clients.

European Union foreign ministers Tuesday toughened sanctions on Russia and threatened trade restrictions on defense and other items if Moscow doesn't cooperate on managing the crash site and defusing tensions.

Gold prices came under pressure after data showed U.S. sales of existing homes rose 2.6% in June to a seasonally adjusted annual rate of 5.04 million, the highest since October. Some gold traders worry that signs of improvement in the U.S. housing sector could allow the Federal Reserve to accelerate its stimulus rollback, removing a long-running support from the gold market.

Still, gold's losses were partly offset by U.S. inflation data. The consumer-price index rose 0.3% in June, matching economists' expectations but slowing from May's 0.4% increase. The index was up 2.1% in June from a year earlier, unchanged from May's annual rise. However, excluding food and energy, the index rose 1.9% in June, slipping from May's 2% annual increase.

Source:  WSJ