Gold prices fell to their lowest levels this year as signs of a stronger economy pushed the US dollar.
May May gold supply contracts fell 2.1% to $ 1,288.90 per troy ounce in the Comex Division of the New York Mercantile Exchange, the lowest since December and the largest one-day decline since 2016. Prices The precious metal traded between $ 1,300 and $ 1,360 for most of this year, before breaking out of the bottom of the range on Tuesday. 19659003] "Gold has gone hard," said Blue Line Futures LLC, a Chicago-based commodities exchange, in a note. "What has become a very constructive bottom-up process in the past two weeks is now out the window."
A rally in the dollar, along with higher Treasury yields, contributed much to the sale. A stronger greenback makes commodities like gold more expensive for global buyers, while higher yields make the metal less attractive to some investors.
The WSJ Dollar Index, which tracks the US currency against a basket of other currencies, posted a new high for the year, rising 0.6% to 86.91
These moves were fueled by data on Tuesday, which showed that the US economy gained momentum and outweighed the weakness earlier in the year.
On the one hand, the Department of Commerce said Americans spent more on shops, online and in restaurants in April. Retail sales recovered nearly 5% from a winter break to the previous year. Better consumption is expected to contribute to broader growth, economists said.
Regardless, a New York-based US Federal Reserve bank survey said May's activity picked up more than expected, with indexes of paid prices and prices both rising.
That pushed the gold market, suggesting that inflation accelerated, said Tai Wong, director of metals at BMO Capital Markets. Although investors often use gold as a hedge against inflation, many have argued that rising prices may accelerate the rate of Federal Reserve rate hikes. Federal Reserve Bank of Dallas President
Tuesday morning said it was "right" for the central bank to raise interest rates.
The firmer dollar seemed to offset any ongoing geopolitical turmoil over Sino-US trade, Russia or the US withdrawal from the Iranian nuclear program. Emagazine.credit-suisse.com/app/art … = 157 & lang = DE Traitors largely overlook an outbreak of violence and political tensions in the Gaza Strip. Englisch: emagazine.credit-suisse.com/app/art … = 263 & lang = en
Despite the tendency to focus on assets such as gold in times of increasing instability
Among the current risk factors, there is nothing that investors "on the scale of North Korea's launch of missiles over Japan, as we saw last year," said
an analyst at SP Angel Corporate Finance LLP.
Chart patterns indicated some traders that the gold market was still below the 200-day average on Tuesday.
"There is simply no bullish event for the metal market," said Ira Epstein, strategist at Linn & Associates LLC in Chicago.
Mr. Epstein suggested that gold prices could fall as high as $ 1,250 as market participants awaited a result from the much-vaunted US North Korea summit in June.
Copper prices suffered on Tuesday from the weighting of a higher dollar with contracts for May falling 1.2% to $ 3.0425 a pound.
Write to Benjamin Parkin at Benjamin.Parkin@wsj.com and David Hodari at David.Hodari@dowjones.com