Spot gold slipped as Wall Street headed towards lunchtime on Tuesday, tracking Western stock markets lower after news that US home sales fell short in March as consumer confidence slipped back.
After the London PM Fix at $688.40, physical gold bullion prices versus the US Dollar rose back above $690 before slipping to a low of $686.60.
Gold also slipped versus the Pound Sterling, hitting £342.60 per ounce. It fell fast against the Euro, dropping to €504 per ounce as the European currency jumped more than half-a-cent higher to $1.3630 on the US data.
"Light profit-taking sales somewhat dented the bullish sentiment," says Standard Bank's morning report.
"Gold [on Monday] found resistance in the $692/$695 band much too tough to penetrate.
"Whilst the interim bullish outlook of the metal remains intact, it could be some time before gold successfully penetrates this significantly difficult resistance band.
"Support at $680 remains critical in keeping this outlook intact."
In the futures market, Comex gold for June delivery traded at $694.80 just ahead of the New York open.
Earlier in Japan, gold futures for delivery in Feb. '08 closed today 0.5% lighter at the equivalent of $693 per ounce.
"The US Dollar recovered a little bit of ground against the Euro," says David Moore, a strategist at Commonwealth Bank in Sydney.
"The [spot] gold price has been fairly stagnant this morning...As it did not go over $700, that may have led to a little bit of selling."
"If we see the Dollar soften again then I think we will see gold prices higher again in the short term." (Click here for the link between the Dollar and gold prices...)
Wall Street economists had expected today's US data to show existing home sales of 6.45 million in March, down from 6.69 million in Feb.
But the actual number, just 6.12 million, shocked currency traders into expecting static or lower US rates ahead, leading them to sell Dollars and buy Euros. (What's to fear in lower US interest rates?)
The fastest moves in the currency markets, however, came earlier today on the Aussie Dollar.
It sank 0.8% against the US greenback on "disappointing" inflation numbers that suggest Australian rates may not go higher next month.
"This puts a dint in the short-term strength of the Australian dollar," reckons one senior currency dealer interviewed by Bloomberg.
"With consumer prices like that, we will see the RBA hold in May."
Rising inflation is the only thing supporting the British Pound right now, too. For the full story – and a view of the risks facing all of the major world currencies – click here now...