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Gold down sharply on good U.S. data, strengthening U.S. equities

Xinhua, May 25, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange fell on Tuesday as good U.S. data boosted U.S. equities.

The most active gold contract for June delivery fell 22.30 U.S. dollars, or 1.78 percent, to settle at 1,229.20 dollars per ounce.

After four weeks of gaining on weakened U.S. equities, the precious metal was put under extensive pressure as the U.S. Dow Jones Industrial Average rose by 208 points, or 1.19 percent as of 17:30 GMT. Analysts noted that when equities post losses, the precious metal usually goes up, as investors are looking for a safe haven, while the opposite is true when U.S. equities post gains.

The U.S. dollar also put pressure on gold as the U.S. Dollar Index rose by 0.37 percent to 95.60 as of 17:30 GMT. The index is a measure of the dollar against a basket of major currencies. Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors.

A report released by the U.S. Census Department showed new home sales increasing at the highest level since January 2008, with new home sales increasing to an annualized rate of 619,000 during the month of April, with the two prior months being revised upward to a net of 39,000 sales. Analysts noted that this was much better-than-expected and put pressure on the precious metal and gave support to U.S. equities markets.

Traders are waiting for the international trade in goods report due on Wednesday, durable goods and weekly jobless claims on Thursday, and the U.S. gross domestic product report on Friday.

Silver for July delivery fell 16.90 cents, or 1.03 percent, to close at 16.254 dollars per ounce. Platinum for July delivery dropped 8.90 dollars, or 0.88 percent, to close at 1,004.20 dollars per ounce. Endit