Gold was traded in a narrow range around the $1,250 an ounce level on Wednesday, waiting for more clues on the Fed timing of tapering their bond purchasing programme.
The U.S. housing data came stronger than expected, which fueled investors speculations the Federal Reserve will start tapering sooner. The U.S. jobless claims is due to be released today, which is another sign the investors awaiting.
Prices for single-family homes notched big gains in September, which is the newest signals of strength in the U.S. economy, and it could prompt the Fed to reduce its monthly bond purchases of $85 billion soon. Permits for future U.S. home construction assessed a 5 and half-year high in October.
Economists anticipate the U.S. central bank to start tapering only in March, but gold prices are passive as some traders glimpse a risk that the Fed could start tapering in December.
Although, technical analysts alerted that as long as gold price remains underneath $1,300 it faces the risk of declining further.
Gold price in the spot market was up 0.2% to $1,245.60 an ounce by 7:17 AM GMT, after dropping 0.7% in the preceding session.
Analysts from Wing Fung Financial Group in Hong Kong said in a note about gold prices, if bullion will not close overhead the resistance level of $1,260 an ounce in the next couple of days, the prices may drop back.
The yellow metal has dropped over 25% this year as investors dragged cash out of bullion to invest in higher-yielding equities.