Gold tumbles below key trend line for first time in 7 months after data, as 10-year yield punches above 3%
Gold futures early Tuesday in New York broke sharply lower, flirting with a seven-month low following economic reports on retail sales and manufacturing, with the metal already under pressure from climbing rates in the benchmark 10-year Treasury. Most recently, June gold was down 1.8%, or off $23.80, at $1,294.60 an ounce, which, if it holds, would represent the lowest close gold for a most-active contract since late Dec. 27, when it settled at $1,291.40, according to FactSet data. The retreat for gold also pushes the commodity below its 200-day moving average at $1,307.80 also for the first time since late December. Rising rates have played a key role in undermining appetite for the asset considered a haven, as the 10-year Treasury yield rises back above a key psychologically important level at 3%. Climbing government bond yields can undermine demand for bullion which doesn’t offer a yield. The decline in gold also came as futures for the Dow Jones Industrial Average and the S&P 500 index were falling firmly lower, signalling a weaker open for U.S. indexes at the start of the regular session. Early Tuesday data showed sales at U.S. retailers rose for a second straight month in April, suggesting the economy is accelerating after a slow start to the year. Meanwhile, the Empire State manufacturing index rose in May, also pointing to an improving economy. While there are no signs of overheating, investors may be concerned that the Federal Reserve may try to slow down the economy by raising interest rates more aggressively.