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Gold remained low and fairly unchanged during early European trading following yesterdays biggest drop in three weeks as positive U.S. housing data supported Feds view into tapering Quantitative Easing in the second half of the year, which strengthened the dollar.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at $1 320.05 an ounce at 8:19 GMT, up 0.04% on the day. Prices ranged between days high and low of $1 324.15 and $1 314.65 per ounce respectively. The precious metal settled 1.1% lower at $1 319.50 on Wednesday and trimmed this weeks advance to little over 1.8% after gaining almost 6% in the previous two.

Gold fell on Wednesday as the dollar extended positions against its counterparts following upbeat U.S. data after plunging near Tuesday’s one-month earlier in the day. The currency rose as July’s Markit Flash U.S. Manufacturing PMI surpassed analysts’ expectations and surged to 53.2, compared to June’s final estimate of 51.9 and projections for a rise to 52.6.

Meanwhile, June’s New Home Sales also surpassed anticipations for an increase to 0.484 million and surged to 0.497 million, a five-year high. May’s reading was revised downwards to 0.459 million from 0.476 million new homes sold.

The dollar index, which measures the greenbacks performance against six major counterparts, settled 0.3% higher on Wednesday, trimming current weeks decline to little over 0.5%. The U.S. currency was pressured by its major counterparts. The September contract traded at 82.28 at 8:24 GMT, down 0.12% on the day. Prices ranged between days high and low of 82.43 and 82.15 respectively.

Lachlan Shaw, an analyst at Commonwealth Bank of Australia, wrote in an e-mail to Bloomberg: “Gold declined after the U.S. homes sales data increased expectations that the Federal Reserve may scale back stimulus measures this year.”

Gold fell 21% this year and is poised to mark its first annual decline after advancing for 12 years following Federal Reserves intentions to trim its monetary easing program in the upcoming months. The yellow metal has mainly been tracking shifting expectations for an earlier-than-expected deceleration of Fed’s Quantitative Easing program. Signs of a consistent recovery of the U.S. economy reduce the need for the central bank to ease money supply, thus reducing demand for gold as a hedge. Ben Bernanke stated at his latest testimony before Congress the U.S. economy currently needs the central bank’s accommodative monetary policy in the foreseeable future and it can even be accelerated, if recovery slows its pace. However, Bernanke supported Feds view that Quantitative Easing is still expected to be tapered within the year and brought to an end by mid-2014, if the requirements are fulfilled.

According to a Bloomberg survey that was conducted between July 18 and July 24, half of the economists polled said Fed will begin tapering its Quantitative Easing program in September, up from 44% in the preceding month’s poll.

Elsewhere on the precious metals market, silver marked a slight daily gain, while platinum and palladium declined. Silver for September delivery traded at $20.053 per ounce at 8:17 GMT, up 0.18% on the day. Prices ranged between $20.153 and $19.973. Platinum October futures retreated 0.93% on the day, trading at $1 441.65 per ounce. Futures held in range between days high and low of $1 448.45 and $1 436.35 respectively. Palladium for September delivery fell to $741.90 at 8:16 GMT, down 0.46% for the day. The metal shifted between days high and low at $749.80 and $740.90 respectively.

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