Gold futures bounce off 7-week low to reclaim $1,200-level

Investing.com - Gold futures turned higher on Monday to reclaim the key $1,200-level, after data showed that U.S. existing home sales fell more than expected in January to hit the lowest level in nine months, dampening optimism over the health of the housing market.

The National Association of Realtors said earlier that existing home sales decreased 4.9% to 4.82 million units last month from 5.07 million in December. Analysts had expected existing home sales to fall 0.8% to 4.97 million units in January.

Investors now looked ahead to testimony from Federal Reserve Chairwoman Janet Yellen to the Senate Banking Committee on Tuesday for any indication on when U.S. interest rates may start to rise.

Gold has been under pressure in recent weeks amid ongoing expectations for the Federal Reserve to start raising interest rates later this year.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery tacked on $3.80, or 0.32%, to trade at $1,208.70 during U.S. morning hours.

Prices touched a session low of $1,190.70 earlier, a level not seen since January 5.

On Friday, gold shed $2.70, or 0.22%, to settle at $1,204.90. The precious metal lost $22.60, or 1.81%, last week, the fourth straight weekly decline.

Futures were likely to find support at $1,177.80, the low from January 5, and resistance at $1,215.30, the high from February 20.

Prices were at seven-week lows earlier after euro zone finance ministers approved the extension of Greece’s €240 billion bailout by four months on Friday, removing concerns that the country would face a liquidity crunch when its current bailout agreement expired at the end of the month.

Athens has until later Monday to present a list of reforms to be approved by the country’s creditors in order to secure the bailout extension, which will give it more time to reach a lasting agreement with its creditors.

Meanwhile, silver futures for March delivery jumped 26.7 cents, or 1.64%, to trade at $16.58 a troy ounce. Prices hit $16.11 earlier in the day, the lowest level since January 5.

Elsewhere on the Comex, copper for March delivery eased down 0.9 cents, or 0.35%, to trade at $2.582 a pound in holiday-thinned trade.

Markets in the world's biggest copper consumer, China, will remain closed until February 24 for the Lunar New Year holiday, removing a key support for prices.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.