(MENAFN- FxPro) Gold prices tumbled below the $1,200-level early on Tuesday, as a broadly stronger U.S. dollar dampened the appeal of the precious metal.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery hit an intraday low of $1,195.70 a troy ounce, a level not seen since May 13, before trading at $1,196.70 during European morning hours, down $8.20, or 0.68%.
On Monday, gold prices tacked on 40 cents, or 0.03%, to close at $1,205.30 as trade volumes were light with U.K. markets closed for a public holiday and markets in the U.S. remaining shut for the Memorial Day holiday.
Futures were likely to find support at $1,191.50, the low from May 13, and resistance at $1,215.20, the high from May 22.
Also on the Comex, silver futures for July delivery lost 21.4 cents, or 1.26%, to trade at $16.83 a troy ounce, the lowest level since May 13. Silver closed at $17.06 on Monday, up 1.4 cents, or 0.08%.
The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was up 0.7% at 97.14 early Monday, the strongest level since April 27.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
The dollar strengthened broadly after Federal Reserve Chair Janet Yellen reiterated Friday that the central bank still expects to start raising interest rates later this year if the economy continues to improve as expected.
She also attributed a slowdown in first quarter growth to "transitory factors", including a harsh winter.
The greenback received an additional boost after data showed that underlying inflation in the U.S. rose for a third straight month in April, supporting the case for a rate hike later this year..
Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.
Investors were turning their attention to U.S. data on durable goods orders, new home sales and consumer confidence later Tuesday for fresh indications on the strength of the economy and the timing of a U.S. rate increase.
Elsewhere in metals trading, copper for July delivery dipped 0.9 cents, or 0.3%, to trade at $2.803 a pound. Copper rose 1.2 cents, or 0.43%, on Monday to settle at $2.823.
Meanwhile, the euro fell below the 1.09-level against the dollar as the prospect of a Greek default continued to weigh on sentiment.
Athens has warned that the country would be unable to make a ‚¬305 million payment to the International Monetary Fund due on June 5 if a cash-for-reforms deal with its international lenders is not reached by then.
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