Gold price traded lower as the U.S. dollar strengthens

Gold price traded lower on a stronger U.S. dollar. The U.S. dollar rose against the euro on comments by the European Central Bank (ECB) officials and on the better-than-expected U.S. housing market data. The ECB Executive Board Member Benoit Coeure said on Monday that the ECB plans to expand its asset purchases in May and June due to low market liquidity in July and August. He added that a selloff in the European government bond market was a normal correction, but the pace of the selloff was worrisome.

The ECB Governing Council Member and the Bank of France Governor Christian Noyer said on Tuesday that there are signs that the central bank's monetary easing had a positive effect on inflation expectations. He added that the ECB was ready to take further action if needed to achieve its inflation target.

The U.S. Commerce Department released the housing market data on Tuesday. Housing starts in the U.S. soared 20.2% to 1,135 million annualized rate in April from a 944,000 pace in March, exceeding expectations for a rise to 1.019 million. It was the highest level since November 2007.

The increase was driven by a gain in starts of single-family homes, which jumped to their highest level since January 2008.

Building permits in the U.S. climbed 10.1% to 1.143 million annualized rate in April from a 1.038 million pace in March. Analysts had expected building permits to increase to 1.064 million units.

Housing market seems to pick up as the weakness in first quarter of 2015 seems to be due to harsh weather. But housing market figures are in stark contrast with weakness in consumption, business spending and manufacturing.

June futures for gold on the COMEX today declined to 1208.50 dollars per ounce.