London: Gold fell 1 per cent yesterday to a low of $1,146.35 an ounce as the dollar hit a session high versus the euro, with well-received US housing starts data pushing the single currency below the key $1.35 level.
Spot gold was bid at $1,149.90 an ounce in early afternoon trading, against $1,157.95 late in New York on Thursday. US gold futures for June delivery on the Comex division of the New York Mercantile Exchange fell $10.50 to $1,149.80 an ounce.
Prices were rangebound in earlier trade, caught between opposing pressures as fears over the outlook for debt-laden Greece prompted some interest in gold as a haven from volatility in other markets, but pressured the euro.
Support above $1,150 an ounce was unable to withstand the dollar's rise versus the euro, however.
"At this point, gold is back trading as usual against the dollar," said Andrey Kryuchenkov, an analyst at VTB Capital. "It looks overbought, and physical buyers are not going to come back in at these levels."
"There is very good support at $1,144, but I expect it to come off to the mid-$1,130s. We need a bit of a correction."
Strength in the dollar curbs gold's appeal as an alternative asset and makes dollar-priced commodities more expensive for other currency holders.
The euro slid to a one-week low below the key $1.35 level yesterday, driven by technical momentum after stronger than expected US housing starts data lifted the dollar.
Housing starts rose more than expected in March to their highest level since November 2008 and permits to build new homes scaled a 17-month peak, offering hope the housing market recovery remained on course.
US investment demand for gold has been firm in recent weeks, with holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, steady at record levels on Thursday.
From a chart perspective, gold prices are looking relatively firm, though a further pullback is on the cards, analysts said.
