By Matt Day Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Gold futures pulled back Wednesday as higher prices led to drops in physical demand and confidence in equities markets lessened the need for a rainy day asset.
But prices remained within their recent range as the precious metal continued to look for consistent direction.
The most actively traded contract, for August delivery, fell $5.50, or 0.5%, to $1,208 an ounce on the Comex Division of the New York Mercantile Exchange.
Since retreating from record prices set in June, futures have been stuck in the orbit of the $1,200 an ounce mark, making minor moves reacting to each day's economic news, but not with enough momentum to break out on either side. The most-active futures contract has not settled more than $15 an ounce above or below $1,200 since July 1.
Prices have found support from physical buyers each time they neared the lower end of the range, but the interest fades as prices rise, said Suki Cooper, precious-metals analyst with Barclays Capital in London.
"For now, hovering around $1200 appears to be comfortable territory for gold," Cooper said.
Prices were also pressured Wednesday by a lack of consistent inflows from investment funds or haven-seeking buyers. Equities markets have recovered from their recent lows, eroding demand for gold among those who buy it on the hope that it will hold its value better than other assets during economic turmoil.
The metal's rise to record highs in May and June was supported by the combination of support from gold investment funds and a rush of haven-seeking purchases as disappointing economic data raised doubts about the viability of the economic recovery, Cooper said.
-By Matt Day, Dow Jones Newswires; 212-416-4986; matthew.day2@dowjones.com
