Investing.com - Gold prices dropped further on Tuesday, as the release of strong U.S. retail sales data sent the greenback broadly higher, while easing tensions between the U.S. and North Korea dampened demand for safe-haven assets.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery were down 1.22% at $1,274.98, the lowest since August 9.
The December contract ended Monday’s session 0.28% lower at $1,290.40 an ounce.
Futures were likely to find support at $1,265.90, the low of August 9 and resistance at $1,296.40, Monday’s high.
The greenback extended earlier gains after data showed that U.S. retail sales rose at a faster than expected rate in July, brightening the outlook for economic growth in the third quarter.
A separate report showed that the Empire State manufacturing index climbed to 25.20 in August from 9.80 the previous month, blowing past expectations for a reading of 10.00. It was the highest level since September 2014.
The dollar also remained supported after New York Federal Reserve President William Dudley said on Monday that he favored another interest rate hike this year if the economic conditions evolved in line with his expectations.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.61% at 93.91, the highest since July 26.
Gold is sensitive to moves higher in both U.S. rates and the dollar. A stronger dollar makes gold more expensive for holders of foreign currency, while a rise in U.S. rates lifts the opportunity cost of holding non-yielding assets such as bullion.
Meanwhile, demand for the safe-haven precious metal continued to weaken after North Korea said on Tuesday it had delayed a decision on a plan to fire missiles at the U.S. Pacific territory of Guam while it watches U.S. actions a little longer.
At the same time, South Korean President Moon Jae-in said there will be no military action upon the Korean peninsula without Seoul's consent and that the government would prevent war by all means.
Elsewhere in metals trading, silver futures for September delivery tumbled 2.60% to $16.676 a troy ounce, while copper futures for September delivery eased up 0.09% to $2.907 a pound.