Investing.com -- Gold futures fell sharply on Tuesday following the Memorial Day holiday weekend, as a wave of optimistic U.S. economic data pushed the dollar to its highest level in four weeks.
On the Comex division of the New York Mercantile Exchange, gold for August delivery plunged 17.20 or 1.43% to $1,187.70 a troy ounce. Earlier in the session, gold plummeted to $1,185.80, its lowest level in more than two weeks, dipping below $1,200 an ounce for the first time since May 13.
Gold extended losses from overnight trading, falling to a session-low of $1,185.80 in the U.S. morning trading session after a flurry of economic reports provided indications that the Federal Reserve could institute an interest rate hike at some point this year. On Friday, Fed chair Janet Yellen said it would be appropriate to raise its benchmark Federal Funds Rate in 2015 if the economy shows continued improvement.
U.S. durable goods orders fell slightly by 0.5% in April, tamped down by a 4% decline in commercial airlines and 3.4% dip in computer orders. Following a 4% rebound in March, analysts expected long-lasting manufactured goods orders to drop by 0.6% for the month.
A reading of core orders, however, which excludes volatile bookings of airplane and auto orders, rose by 0.5% last month, above expectations of a 0.4% gain. Last month's rebound could be attributed solely to a surge in airplane orders after transportation procurements spiked by 15.2%. In March, the core reading fell by 0.2% month-to-month and by nearly 2% on a yearly basis.
Shortly thereafter, the U.S. Department of Commerce said new home sales in April rose 6.8% to a seasonally-adjusted 517,000. The gains fell in line with analysts' forecasts of a 485,000 to 540,000 increase for the month. New sales were concentrated in the Southern portion of the United States, arguably the most important housing region in the nation, where the figure rose by 5.8% for April. The surge still failed to offset a precipitous fall in March when new home sales in the south dropped by nearly 12%.
Separately, consumer confidence showed signs of stabilizing inching up to 95.4 for the month of May, up 0.2 from a previous reading last month. Analysts expected The Conference Board's monthly Consumer Confidence Index to tick down by 0.1 to 95.1.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, jumped more than 1.25% to an intraday high of 97.46, its highest level since April 24. Investors continued to digest a speech by Yellen last Friday in Providence. In an address to the Greater Providence Chamber of Commerce, Yellen said the Federal Open Market Committee believes that inflation will move toward its targeted goal of 2%, as crude prices continue to stabilize and transitory factors weighing on the economy continue to recede.
Dollar-denominated commodities such as gold struggle to compete with high-yield bearing assets in periods of a stronger dollar.
Meanwhile, euro zone officials said a group of deputy finance ministers would hold a teleconference on Thursday after the conclusion of several days of talks between Greece and its troika of creditors. Additionally, a senior German official told Reuters there was no reason to believe that Greece would fail to meet a €300 million payment to the International Monetary Fund on June 5.
Gold is viewed as a safe haven for investors during periods of widespread economic instability.
Elsewhere, silver for July delivery plunged 0.293 or 1.72% to 16.758 an ounce.
Copper for July delivery fell 0.033 or 1.17% to 2.779 a pound.