MTECHTIPS:-Gold holds gains after new home sales data, Yellen comments support

Gold remained in positive territory on Wednesday, albeit off the best levels of the session, after data showed that U.S. new home sales fell less than expected in January, easing concerns over the health of the housing sector.

The U.S. Commerce Department said new home sales fell by 0.2% to 481,000 units last month, compared to expectations for a decline of 1.3% to 475,000.  New home sales in December were revised up to 482,000 units from a previously reported 481,000 units.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery tacked on $7.40, or 0.62%, to trade at $1,204.70 a troy ounce during U.S. morning hours after hitting an intraday high of $1,211.70 A day earlier, gold fell to $1,190.00, the lowest since January 5, before settling at $1,197.30, down $3.50, or 0.29%.

Futures were likely to find support at $1,177.80, the low from January 5, and resistance at $1,215.30, the high from February 20 Meanwhile, silver futures for May delivery rallied 32.0 cents, or 1.97%, to trade at $16.55 a troy ounce. Prices hit $16.08 on Tuesday, the lowest level since January 5.Gold remained supported after Federal Reserve Chair Janet Yellen said the central bank would not hike rates for the next few meetings.

In prepared remarks during testimony to the Senate Banking Committee on Tuesday, Fed Chair Yellen said it was “unlikely” that economic conditions would warrant an interest rate increase for “at least the next couple of FOMC meetings”.

She added that if the economy keeps improving as the Fed expects it will modify its forward guidance, but emphasized that a modification of its language should not be read as indicating that a rate hike would automatically happen within a number of meetings.

Market analysts said the testimony gave the Fed more flexibility to hike rates later than June of this year.

A delay in raising interest rates would be seen as bullish for gold, as it decreases the relativecost of holding on to the metal, which doesn’t offer investors any similar guaranteed payout.

Yellen will address the House Financial Services Committee later on Wednesday, with market analysts expecting her to take the same stance she made before the Senate Banking Committee.