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Gold slid further on 27 February, after striking a near four-month high the day before, as upbeat US housing data buoyed expectations the US Federal Reserve would stick to its plan to trim its bond buying stimulus.
Gold for immediate delivery fell 0.2% to $1,327.32 an ounce by 09:31GMT in London. The metal climbed to $1,345.46 on 26 February, the highest level since 30 October, before ending 0.8% lower as data revealed that new home sales in the US rose to a five-year high.
Gold for delivery in April hovered at $1,327.60 an ounce on the Comex in New York on trading volumes that were 17% lower than that average for the past 100 days for that time of the day, Bloomberg data showed.
US Fed chief Janet Yellen could restate a plan to continue trimming asset buys when she testifies before a US Senate panel later in the day.
Bullion is still headed for a second monthly advance, the longest such run since August 2013, as emerging-market turmoil and concerns about the pace of the US economy recovery have boosted its safe-haven investment allure.
Paul Renken, an analyst at VSA Capital said in a note to clients: "A rising US dollar and temptation by traders to take profits on the recent run-up in price have brought the gold price down below $1,330 an ounce. Gold continues to trade weaker today. Traders will be listening for signs of continued US economy improvement in Janet Yellen's speech."
Commerzbank Corporates & Markets said in a note to clients: "The gold price fell for a time [on 26 February] by 1.7%, i.e. more than $20 per troy ounce, doubtless on the back of profit-taking following its sharp rise in the weeks before. In our opinion, [26 February's] price dip does not yet signal the end to gold's current upswing: for one thing, gold ETFs saw further inflows of two tons [on 26 February], and for another the price remains above the 200-day moving average, which means that the technical picture is continuing to brighten.
"According to Indian newspaper reports, the country imported an alleged 38 tons of gold in January, following a figure of 25 tons in December. Given the import restrictions that are in place, this appears somewhat high. The All India Gems &Jewellery Trade Federation estimates January gold imports at 21 tons - a figure we regard as more realistic. This fiscal year, imports are not likely to exceed 550 tons - and next fiscal year they will not exceed 600 tons, assuming the restrictions remain in place."
"The Federation [on 26 February] called once again for the restrictions - especially the 80:20 rule - to be abolished immediately, and for import duties to be lowered to 2%. If the restrictions were to be eased or indeed completely lifted, this would no doubt spark considerably higher Indian gold demand, which should be reflected in higher gold prices," the German bank added.
Assets in the SPDR Gold Trust, the largest bullion-backed exchange-traded product, were unchanged on 26 February after gaining for three days, and are headed for the first monthly expansion since December 2012.
In China, the leading gold consumer, volumes for the benchmark contract on the Shanghai Gold Exchange declined on 26 February from a two-week high struck on 25 February.
Bullion has risen some 10% this year.
Gold prices shot up 70% between December 2008 and June 2011 as the world's most powerful central bank injected more than $2tn into the financial system.