Gold falls as US outlook strengthens

By Ross Tucker

Gold prices closed lower Friday after a mixed report on U.S. new-home sales and a better-than-expected​ uptick in consumer sentiment.

Gold (-GC) for April delivery fell 9.90 to settle at $1,776.40 an ounce at the Comex division of the New York Mercantile Exchange. Gold traded as high as $1,784.40 and as low as $1,772.40 an ounce while the spot price was falling $5.20, according to Kitco's gold index.

Silver (-SI) slid 22 cents to finish at $35.34 an ounce while the U.S. dollar index was down 0.4% at $78.342.

Shortly after U.S. markets opened, it was reported that the final University of Michigan/Thomson Reuters index of consumer sentiment for February came in at 75.3, up from 75 the prior month. The reading was the highest since February 2011, and exceeded economists' expectations of 73.

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"The strong gains in household confidence is quite encouraging," said Millan Mulraine, senior U.S. strategist, TD Securities. "However, we are somewhat concerned about the sustainability of this rebound as higher gasoline prices could play an important role in dampening confidence toward the economy."

Also on Friday, the Census Bureau reported that new-home sales for January surpassed expectations. Sales fell 0.9% to a 321,000 annual pace from an upwardly-revised 324,000 rate in December, beating the consensus economist expectation of sales of 315,000.

Jon Nadler, senior metals analyst with Kitco Metals, said despite today's slight pullback, there are more European debt issues looming that are likely to keep gold prices up.

"At this point, the pressure remains high not only on Greece to 'perform' following its receipt of the Eurogroup's second bag of money, but also on the IMF," said Nadler. "The institution is seen as having to commit a whole lot more cash in order to avert certain economic outcomes (already manifest) in the European theater. China and Japan have both signaled that they are willing to help . . . but (IMF chief Christine Lagarde) will have to be more than . . . guarded when it comes to signaling that perhaps as much as $500 billion in additional lending resources is still needed by her institution."

Nadler acknowledged that gold prices are trading counter to their typical trend. "Historically speaking, with gold making robust advances, one would not be also reading about the S&P 500 ($INX) trading near a ten-month high, or about the Dow Jones Industrial Average ($INDU) reaching its best level since May of 2008 (13,000!), but quite the opposite. This, however, appears to be the new 'normal' for the time being," he said.

Gold mining stocks were trading mostly lower Friday. Kinross Gold (KGC) was falling 1.2% at $11.15 and Randgold Resources (GOLD) was down 1.2% at $115.49. Agnico-Eagle (AEM) was down 1.9% at $36.82, while Eldorado Gold (EGO) was up 0.6% at $14.97.