Commodity Tips|Gold dips as U.S. Treasury yields rise on housing starts

Gold dipped on Tuesday as U.S. Treasury yields rose on an uptick in housing starts for November and even though the dollar fell, a factor that generally supports gold.

Market players were wary of taking new positions before the holiday season. Gold is on track to post its narrowest trading range of any quarter in a decade in the last three months of the year.

Spot gold was down 0.04 percent at $1,260.86 an ounce by 1:49 p.m. EST (1849 GMT), earlier hitting a nearly two-week high of $1,265.20, while U.S. gold futures <GCv1> futures for February delivery settled down $1.30, or 0.1 percent, at $1,264.20 per ounce.

U.S. Treasury yields hit session highs and the yield curve steepened as U.S. housing starts unexpectedly rose in November. <US7YT=RR>

"That prompted rates to move higher and the U.S. dollar was up as a result," but edged lower later, said Bart Melek, head of the commodity strategy at TD Securities in Toronto.

Higher bond yields make non-yielding bullion less attractive to investors. They also tend to boost the U.S. dollar, but "investors are adjusting positions ahead of the holiday weekend, so there's some ambiguity right now," Melek said.

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