Investing.com – Gold prices hit a fresh low for the year Tuesday as a surge in both the dollar and bond yields on mostly upbeat economic data reduced investor appetite to hold the precious metal.
Gold futures for June delivery on the Comex division of the New York Mercantile Exchange fell by $27.30 or 2.07%, to $1,290.90 a troy ounce.
A report on retail sales pointing to underlying U.S. economic growth sent bond yields soaring, helping the dollar to hit a fresh high for the year, pressuring gold prices to break below their 200-day moving average at $1,306 - a price level that had acted as support in recent sessions.
The Commerce Department said on Wednesday that retail sales fell 0.3% last month. That missed economists’ forecast for a 0.5% rise but retail sales for March was revised higher to 0.8%.
Market participants said the upward revision to March retail sales bodes well for U.S. economic growth as it confirmed expectations that weakness seen in first-quarter consumer spending was temporary, paving the way for additional Fed rate hikes.
Gold is sensitive to moves higher in both bond yields and the U.S. dollar – A stronger dollar makes gold more expensive for holders of foreign currency while a rise in U.S. rates, lift the opportunity cost of holding gold as it pays no interest.
The weakness in gold prices comes despite an uptick in geopolitical uncertainty amid escalating Middle East tensions, and renewed fears the U.S. and China may struggle to resolve trade disputes as both nations got the second round of trade talks in Washington underway Tuesday.
Copper fell 1.16% to $3.06.
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