Gold futures extend losses after U.S. durable goods data

Investing.com - Gold prices tumbled further below the $1,200-level on Tuesday, after data showed that U.S. core durable goods orders rose more than expected in April.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery hit an intraday low of $1,187.60 a troy ounce, a level not seen since May 12, before trading at $1,189.10 during U.S. morning hours, down $15.80, or 1.31%.

On Monday, gold prices tacked on 40 cents, or 0.03%, to close at $1,205.30 as trade volumes were light with U.K. markets closed for a public holiday and markets in the U.S. remaining shut for the Memorial Day holiday.

Futures were likely to find support at $1,181.00, the low from May 12, and resistance at $1,215.20, the high from May 22.

Also on the Comex, silver futures for July delivery lost 36.3 cents, or 2.13%, to trade at $16.68 a troy ounce, the lowest level since May 13. Silver closed at $17.06 on Monday, up 1.4 cents, or 0.08%.

The U.S. Commerce Department said that core durable goods orders inched up 0.5% in April, beating forecasts for an increase of 0.4%.

Orders for core capital goods, a key barometer of private-sector business investment, increased 1.0% last month, easily surpassing expectations for a 0.3% increase. Shipments of core capital goods, a category used to calculate quarterly economic growth, rose 0.8% in April, above forecasts for a 0.2% gain.

The upbeat data raised hopes that the economy was regaining strength after stalling in the first quarter, supporting the case for higher interest rates.

Federal Reserve Chair Janet Yellen reiterated Friday that the central bank still expects to start raising interest rates later this year if the economy continues to improve as expected.

She also attributed a slowdown in first quarter growth to "transitory factors", including a harsh winter.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.7% at 97.14, the strongest level since April 27.

A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.

Elsewhere in metals trading, copper for July delivery dipped 1.7 cents, or 0.61%, to trade at $2.794 a pound. Copper rose 1.2 cents, or 0.43%, on Monday to settle at $2.823.

Meanwhile, the euro fell below the 1.09-level against the dollar as the prospect of a Greek default continued to weigh on sentiment.

Athens has warned that the country would be unable to make a €305 million payment to the International Monetary Fund due on June 5 if a cash-for-reforms deal with its international lenders is not reached by then.