Gold trims gains, stays firm on soft consumer confidence report

Investing.com - Gold prices moved off earlier highs but remained range bound and in positive territory on Tuesday after a soft U.S. consumer confidence report cemented expectations for the Federal Reserve to leave monetary stimulus programs in place until early 2014.

Stimulus tools such as the Fed's USD85 billion in monthly bond purchases aim to drive recovery by pushing down long-term interest rates, weakening the dollar as long as they remain in effect.

Gold and the dollar tend to trade inversely with one another.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,242.55 during U.S. afternoon hours, up 0.08%.

Gold prices hit a session low of USD1,239.45 a troy ounce and high of USD1,257.85 a troy ounce.

Gold futures were likely to find support at USD1,227.45 a troy ounce, Monday's low, and resistance at USD1,257.85, Monday's high.

The February contract settled down 0.24% at USD1,241.60 a troy ounce on Monday.

The Conference Board reported earlier that its index of U.S. consumer confidence declined to 70.4 in November from 72.4 in October.

Analysts were expecting the index to rise to 72.9 this month, and the disappointing reading weakened demand for the dollar by keeping expectations alive for the Fed to hold off on scaling back monthly bond purchases until early 2014, which gave gold a boost though profit taking trimmed earlier gains.

The news offset official data revealing that the number of building permits issued in the U.S. rose to the highest level since January 2008 in October.

The Commerce Department reported earlier that the number of building permits issued rose 6.2% to a seasonally adjusted 1.034 million units from September's total of 970,000. Analysts expected building permits to decline to 940,000 units in October.

Elsewhere in the U.S. housing sector, the Standard & Poor's/Case-Shiller 20-city home price index rose 0.7% in September from August and 13.3% on year in September.

The monthly increase met expectations, though September's on-year gain, the fastest since February of 2006, beat consensus forecasts for a 13.0% reading.

Still, gold rose due to the bearish pressures the soft consumer confidence report had on the dollar.

Elsewhere on the Comex, silver for March delivery was down 0.16% at USD19.895 a troy ounce, while copper for March delivery was down 0.37% and trading at USD3.218 a pound.

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