Investing.com - Gold prices tumbled sharply on Tuesday, after data showed that U.S. consumer confidence improved to a seven-month peak in August, boosting optimism over the health of the economy and supporting the case for an interest rate hike this year.
Gold futures for December delivery on the Comex division of the New York Mercantile Exchange shed $16.70, or 1.45%, to trade at $1,136.90 a troy ounce during U.S. morning hours.
A day earlier, gold rallied to $1,169.80, the strongest level since July 7, before turning lower to end at $1,153.60.
The Conference Board said its index of consumer confidence jumped to 101.5 this month from a reading of 91.0 in July. Analysts expected the index to rise to 93.4 in August.
The Present Situation Index increased from 104.0 last month to 115.1 in August, while the Expectations Index improved to 92.5 from 82.3 in July.
The upbeat data should strengthen expectations of a Federal Reserve interest rate hike as early as next month.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.95% early Tuesday to 94.27.
The dollar plunged almost 2% on Tuesday to hit a seven-month low of 92.52, as mounting uncertainty over the global growth outlook and the subdued U.S. inflation outlook has prompted investors to push back expectations for an initial rate hike by the Fed.
Elsewhere in metals trading, copper for September delivery on the Comex division of the New York Mercantile Exchange jumped 3.4 cents, or 1.48%, to trade at $2.292 a pound during morning hours in New York.
A day earlier, copper futures tumbled to $2.209, a level not seen since July 2009, before recovering slightly to end at $2.259, down 4.4 cents, or 1.93%.
Meanwhile, global equity markets and oil prices rebounded from a brutal selloff in the prior session after China's central bank cut interest rates in a bid to boost economic growth and halt a stock market rout.
The People's Bank of China cut interest rates by 25 basis points to 4.6%. The bank also cut the reserve requirement ratio for large lenders by 0.5% to 18.0%.
Chinese equities have lost nearly 30% over the past two weeks amid growing fears over China's slowing economy.
Fears over a global economic downturn, led by a slowdown in China’s economy have intensified in recent days, accelerating a selloff in equities, commodities and emerging-market assets.