1st LD Writethru: Gold drops as Middle East tension eases

Gold futures on the COMEX division of the New York Mercantile Exchange fell by more 1 percent Wednesday on a drop in safe-haven demand amid easing Middle East tension and the upbeat U.S. housing data.

The most active gold contract for June delivery lost 16.2 U.S. dollars, or 1.35 percent, to settle at 1,186.90 dollars per ounce.

On Tuesday, June gold bounced back above 1200 dollar on haven- inspired buying as tensions in the Middle East flared up after U.S. warships headed to the Gulf of Aden.

Geopolitical tensions ebbed after Saudi Arabia announced on Tuesday the end of a month-long campaign of air strikes against the Houthi rebels who have seized large swathes of Yemen, pushing investors away from the safe-haven market.

The much-better-than-expected U.S. housing sales also put some pressure on the precious metal Wednesday. The National Association of Realtors reported on Wednesday existing home sales in March increased by 6.1 percent to an seasonally-adjusted annual rate of 5.19 million units, their fastest pace in 18 months. Analysts say the figures boost investors' expectations for a rate hike, which supports the U.S. dollar.

A firmer dollar can be a drag on commodities priced in the greenback because it makes those commodities more expensive for investors holding other currencies.

Silver for May delivery fell 21.2 cents, or 1.32 percent, to close at 15.796 dollars per ounce. Platinum for July delivery shed 22.8 dollars, or 1.98 percent, to close at 1,129.70 dollars per ounce. Endite