Gold drops on stronger dollar

Gold futures on the COMEX division of the New York Mercantile Exchange dropped on a stronger dollar Wednesday.

The most active gold contract for August delivery lost 12.9 dollars, or one percent, to settle at 1,277.5 dollars per ounce.

US dollar rose against most other major currencies Wednesday, and the dollar index, a gauge of the greenback against six others, rose to 82.715 in Wednesday from 82.599 late Tuesday.

But the US Federal Reserve Chairman Ben Bernanke's testimony to the Congress on the first day propped up gold, curbing the price fall somehow. Bernanke said as "assets purchases depend on economic and financial developments, they are by no means on a preset course." This indicates that the Fed is slow in reducing quantitative easing.

Economic data released Wednesday were also positive for gold. U. S. Commerce Department reported that housing starts fell 9.9 percent in June to a seasonally adjusted annual rate of 836,000, the lowest level since August 2012.

If gold price cannot break the 1,300-dollar psychological hurdle in the near future, it may fall to 1,248 or 1,220 dollars per ounce, market analysts hold.

Silver for September delivery dropped 51.5 cents, or 2.58 percent, to close at 19.42 dollars per ounce. Platinum for October delivery shed 14.1 dollars, or 0.99 percent, to close at 1,411 dollars per ounce.