By Andy Parker
Bullish economic data from the U.S. is hurting gold and the SPDR Gold Trust (ETF) (NYSEARCA:GLD) this morning as the greenback is moving higher. The dollar has gained ground against a basket of currencies including the yen and Euro to stand at a 4-month high.
A stronger dollar typically dims the demand for gold as it makes the yellow metal more expensive for investors holding other currencies. In this case, a stronger dollar has also been linked to the growth of the U.S. economy that is regaining pace.
The U.S. Commerce Department released data that showed housing starts rose 4.8% in June to 1.189 million units. That signalled a remarkable rebound in the housing market given that housing starts in May were only 1.164 million units. The June housing starts also surprised analysts who were expecting 1.170 million units.
Bullish economic data is driving investors away from safe-haven assets such as gold to riskier stocks.
Prices of gold futures for August delivery were seen going down 1.2% to trade at $1,315 a troy ounce in the morning hours of US trading. But in Asian trading hours, the yellow metal was seen gaining 0.06%, a sign that investors are having mixed interpretations of the global economic situation.