Gold dives, losses limited on mixed US data

US industrial production data awaited

The yellow metal futures dived immediately after the data showed that the US data showed that the Producer prices rose. However gains in the dollar were capped as the housing starts fell to their lowest levels in 17 years and fall in the building permits. The core PPI that excluded the volatile items like energy and food prices however rose 0.2% lower than 0.4% last year also blocked the gains in dollar.

The U.S. current account deficit widened to $176.4 billion in the first three months of the year from $167.2 billion in the fourth quarter which is 5% of gross domestic product. US may building permits fall 1.3% to 969 thousand. Housing starts fell 3.3% to a seasonally adjusted annual rate of 975,000 in May, the lowest level since March 1991. Starts of single-family homes fell 1% to an annual rate of 674,000, also the lowest in 17 years. Wholesale prices rose 1.4% in May, after seasonable adjustments, with energy prices gaining 4.9% and food prices rising 0.8%, the Labor Department reported Tuesday. May's core PPI -- which excludes food and energy prices -- rose 0.2%.

The US industrial production figures and capacity utilization rate are due out 9:15 a.m.

COMEX Gold futures for August contract fell to as low as $876.2 an ounce down $10.1. The supports are at 871 levels with the resistance at 865 levels. Comex gold warehouse stocks were unchanged at 7,603,090 ounces Monday, while silver stocks were up 1,829,024 ounces at 134,664,359 ounces.

MCX Gold for the upfront month contract is trading down around Rs 80 at Rs 12202 per 10 grams, having earlier dipped to as low as 12160. The supports are at 12000 levels.

In currencies, the pound slipped from a one-week high against the dollar on Tuesday as a higher-than-expected rise in inflation raised concerns over the health of the UK economy. Figures showed UK consumer price inflation rose at an annual rate of 3.3 per cent in May, the highest since records began in 1997 and way above the Bank of England’s target of 2 per cent. The euro is up to $1.5484 from $1.5467 late Monday afternoon.

A closely watched gauge of German economic sentiment- the ZEW economic expectations index fell to -52.4 in June, news reports said, from -41.4 in May. The ZEW current conditions index fell to 37.6 in June from 38.6 in May, compared to expectations for a fall to 37.3.