NEW YORK: Gold fell on Wednesday as a strong US retail sales report boosted optimism about the US economy and after prices failed for a second time to surpass $1,600 an ounce, prompting investors to reduce bullion positions.
The metal rose to within $1 of $1,600 on hopes that the European Central Bank will extend its loose monetary policy following euro zone industrial output data showing a surprisingly big fall in January.
Bullion later turned lower after it failed to break above $1,600 for a second day. The dollar index's seven-month high and gains in US equities also weighed on gold's safe-haven appeal.
"The failure of prices to break above $1,600 showed that the money managers, who had become buyers, were cautiously bullish," said Carlos Perez-Santalla, commodities broker at PVM Futures.
Spot gold was down 0.19 percent at $1,589.10 an ounce by 3:26 p.m. EDT (1926 GMT), having earlier hit a two-week high at $1,599.10. US COMEX gold futures for April delivery settled $3.30 lower at $1,588.40 an ounce.
Gold came under pressure after data showed US retail sales expanded at their fastest pace in five months in February. The report came on the heels of strong gains in employment and manufacturing, increasing chances the Federal Reserve might halt its bond-buying earlier than thought.
Late in the day, the Wall Street Journal, citing people familiar with the situation, said the top US derivatives regulator began internal discussions on whether to investigate the daily fixing of gold and silver prices in London for possible manipulation.
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