Gold fell on Wednesday finding little impetus from easing equities as the dollar rose to a four-month high on the back of better-than-expected US housing data.

The dollar firmed on Wednesday, as strong US data and rising expectations that the Bank of Japan will muster additional easing steps sent the dollar index to four-month highs.

Profit-taking weighed on Asian stocks on Wednesday after a record run on Wall Street showed signs of petering out.

Spot gold fell 0.5 per cent to $1,324.83 an ounce at 0702 GMT. It had closed at $1,331.73 on Tuesday.

US gold was down 0.5 per cent at $1,325.60 an ounce.

"Because gold prices have risen so quickly between February and June, I suppose it is taking a breather at the moment,” said Vyanne Lai, an economist at National Australia Bank.

"Generally, we do see global environment being relatively supportive of gold at the current level in the next three months at least.”

Spot gold is biased to fall to $1,313 per ounce after completing its consolidation within a small wedge, as per Reuters technical analyst Wang Tao.

US housing starts

US housing starts rose more than expected in June as construction activity increased broadly, but downward revisions to the prior months' data pointed to a sector treading water in the second quarter.

"The probability of a US Federal rate hike has increased as of today. Some expectations of a rate hike have come back," said OCBC Bank analyst Barnabas Gan.

Gold, which has risen 25 per cent this year, is highly sensitive to rising rates, which increase the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.

"There are still some headwinds to growth and this may lift safe-haven demand should the implications of Brexit start to unwind,” Gan said.

IMF growth forecast

Global risk appetite, which has recovered rapidly from the Brexit shock late in June, received a sobering reminder after the International Monetary Fund cut its global growth forecasts for the next two years on Tuesday, citing uncertainty over Britain's looming exit from the EU.

Among other precious metals, spot silver was down 0.7 per cent to $19.75 an ounce. Spot platinum was down 0.9 per cent at $1,079.50, while palladium, which touched an eight-and-half-month high on Tuesday, was down 0.8 per cent at $651.