Investing.com -- Gold futures moved slightly higher on Tuesday extending gains from one session earlier, as the dollar weakened amid a soft batch of U.S. economic data.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery rose 6.20 or 0.52% to 1,193 an ounce, inching closer to the $1,200 level. Gold dipped below $1,175 during a volatile week of trading last week before rebounding over the last two sessions. Since April 1, gold futures have been in a holding pattern between $1,170 at the low end and $1,215 at its peak.
The U.S. trade deficit in March soared to its highest level in more than six years, as a prolonged labor dispute at critical West Coast ports and the stronger dollar weighed heavily on foreign trade. In its monthly report, the U.S. Department of Commerce said the nation's trade deficit surged 43.1% to $51.4 billion, its highest level since Fall, 2008. The percentage increase was also the highest since December, 1996. Gold reached a session-high of 1,199 after the release.
When adjusted for inflation, the deficit rose $16 billion to $67.2 billion in March, up from $51.2 billion a month earlier. March exports rose modestly to $187.8 billion, while imports skyrocketed by more than $17 billion to $239.2 billion for the month.
Bolstered by cell phone and other household good imports, consumer goods increased by $9.0 billion in March. While the U.S. report a surplus in trade with Central America ($2.9 billion), OPEC ($0.7 billion) and Brazil ($0.4 billion), it was offset by deficits with China($37.8 billion), the European Union ($11.0 billion), Japan ($6.3 billion), Germany ($5.6 billion)and Mexico ($4.8 billion).
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell to 95.20 following the release, after rising to 96.10 earlier in the session. In U.S. afternoon trading, the index inched up to 95.24. Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
The widening of the trade deficit has led to rising concern of a contraction in the economy in the first quarter. Last week, the Commerce Department said GDP for the first quarter rose by 0.2%, in line with paltry estimates from the Federal Reserve of Atlanta. A surge in exports reflecting the stronger dollar served as the heaviest drag on GDP growth, the Commerce Department said.
Following its April meeting last week, the Federal Open Market Committee reiterated that it will take a data-driven approach to the timing of its first interest rate hike since the end of the Financial Crisis.
Gold, which is not attached to interest rates or dividends, struggles to compete with high yield-bearing assets in periods of rising rates.
Elsewhere, Markit's Purchasing Managers Index (PMI) fell to 57.4 in April, below a preliminary reading of 57.8 earlier in the month. In March, the PMI soared to 59.2 the highest level since August. Separately, the Institute of Supply Management reported that its non-manufacturing purchasing manager's index increased to 57.8 last month, above forecasts of 56.2 and up from 56.5 in March.
Silver for July delivery rose 0.087 or 0.53% to 16.528 a troy ounce.
Copper, meanwhile, reached a yearly-high, as July futures gained 0.011 or 0.39% to 2.932 a pound amid strong global demand.