Gold Ends Below $1200 On Upbeat Data, Strong Dollar

(RTTNews) - Gold futures fell sharply to end at a two-week low on Tuesday, as the dollar trended higher against a basket of some major currencies after slew of mostly upbeat economic data from the U.S.

The dollar has been moving higher since Friday after the U.S. inflation data, amid mounting speculation the Federal Reserve will hike rates in either July or September.

A number of Fed officials have indicated they believe the economic weakness in the U.S. has been due to transitory factors and will soon abate. A rate hike will likely strengthen the dollar at gold's expense.

Echoing Friday's remarks from Fed Chief Janet Yellen, Federal Reserve Vice Chairman Stanley Fischer said Monday the central bank expects to follow a "gradual and relatively slow" rate hike path.

On the economic front, a number of U.S. reports were released on Monday with most indicating some upbeat data. New orders for U.S. manufactured durable goods in April declined due to a pullback in orders for transportation equipment, but were in line with economists' expectations.

Home prices in major U.S. metropolitan areas continued to show notable annual growth in the month of March, while new home sales rebounded more than expected in April.

Consumer confidence in the U.S. improved modestly in May after declining sharply in April, but were ahead of estimates.

Gold for June delivery, the most actively traded contract, dropped $17.10 to settle at $1,186.90 an ounce, on the Comex division of the New York Mercantile Exchange on Tuesday. This is the lowest close since May 11.

Gold for June delivery scaled an intraday high of $1,208.20 and a low of $1,184.80 an ounce.

On Friday, gold futures ended lower at $1,204.00, down $0.10, with investors weighing the inflation data with an eye on the Federal Reserve's plans for an hike in interest rates.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 715.26 tons on Tuesday from its previous close of 718.24 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 97.19 on Tuesday, up from its previous close of 96.38 on Friday in late North American trade. The dollar scaled a high of 97.34 intraday and a low of 96.45.

The euro trended lower against the dollar at $1.0882 on Tuesday, as compared to its previous close of $1.0978 in North American trade late Friday. The euro scaled a high of $1.0983 intraday and a low of $1.0869.

In economic news, a Commerce Department report on Tuesday showed a modest decline in new orders for U.S. manufactured durable goods in April, largely reflecting a pullback in orders for transportation equipment. Durable goods orders dipped 0.5 percent in April, but came in line with economists' estimate.

Home prices in major U.S. metropolitan areas continued to show notable annual growth in the month of March, a report from Standard & Poor's showed Tuesday. The 20-City Composite Home Price Index rose 5.0 percent year-over-year in March, unchanged from the annual growth seen in February. Economists expected the rate of growth to slow to 4.6 percent.

A separate Commerce Department report on Tuesday showed U.S. new home sales rebounded more than expected in April, following the pullback seen in the previous month. New home sales climbed 6.8 percent to an annual rate of 517,000 in April from the revised March rate of 484,000. Economists expected new home sales to rise to a rate of 509,000 from the 481,000 originally reported for the previous month.

Meanwhile, consumer confidence in the U.S. improved modestly in May after declining sharply in April, the Conference Board said Tuesday. The consumer confidence index rose to 95.4 in May from a downwardly revised 94.3 in April. Economists expected the index to dip to 95.0 from the 95.2 originally reported for the previous month.

British retailers posted strong growth in sales this month and their outlook for sales and orders improved at an even stronger pace in the year to June, the quarterly Distributive Trades Survey from the Confederation of British Industry showed Tuesday.

The combined real gross domestic product of the 34-member countries of the Organization for Economic Cooperation and Development grew at a slower pace in the first quarter, a quarterly report from the OECD showed Tuesday. Real gross domestic product advanced 0.3 percent in the first quarter, slower than the 0.5 percent expansion seen a quarter ago.