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Gold Prices Dip After Mixed Economic Data, Caution Over Long Positions

Investing.com - Gold prices turned lower on Tuesday after a strong retail sales reading sparked buying interest in the U.S. dollar and pushed Treasury yields higher, although stagnating industrial production briefly undid some of the move, while analysts recommended caution given high levels of long positions.

Investing.com - Gold prices turned lower on Tuesday after a strong retail sales reading sparked buying interest in the U.S. dollar and pushed Treasury yields higher, although stagnating industrial production briefly undid some of the move, while analysts recommended caution given high levels of long positions.

Retail sales gained 0.4% in June, outpacing consensus forecasts for a meager 0.1% advance.

Ole Hansen, head of commodity strategy at Saxo Bank, noted that the positive reading pushed the U.S. dollar index and bond yields higher.

The dollar-denominated precious metal reacts negatively to a stronger greenback as it becomes more expensive for the holders of other currencies, while higher yields increase the opportunity cost of holding non-yielding bullion.

Gold futures for August delivery on the Comex division of the New York Mercantile Exchange, fell $2.30, or 0.1%, to $1,411.20 a troy ounce by 10:01 AM ET (14:01 GMT). The precious metal had been trading higher ahead of the retail sales data but hit intraday lows of $1,408.95 following the retail sales release.

“China data is supporting industrial metals while a crowded gold long is being reduced,” Hansen said following the consumer data.

The reading did little to unravel expectations for the Federal Reserve to cut rates at the end of the month, although it does support Fed Chairman Jerome Powell’s perception that consumer spending remains healthy in light of a strong labor market.

A later flat reading of U.S. industrial production in June, missing even the forecast for weak growth of 0.1%, briefly pulled gold back from intraday lows in a short-lived recovery.

John Reade, chief market strategist of the World Gold Council, warned that “if gold is going to move, one thing that does concern me is that the speculators on Comex remain very long.”

In other metals trading, silver futures rose 1.9% at $15.652 a troy ounce by 10:03 AM ET (14:03 GMT).

Palladium futures declined 0.9% to $1,549.05 an ounce, while sister metal platinum gained 0.9% to $852.50.

In base metals, copper traded up 0.4% to $2.722 a pound.

Retail sales gained 0.4% in June, outpacing consensus forecasts for a meager 0.1% advance.

Ole Hansen, head of commodity strategy at Saxo Bank, noted that the positive reading pushed the U.S. dollar index and bond yields higher.

The dollar-denominated precious metal reacts negatively to a stronger greenback as it becomes more expensive for the holders of other currencies, while higher yields increase the opportunity cost of holding non-yielding bullion.

Gold futures for August delivery on the Comex division of the New York Mercantile Exchange, fell $2.30, or 0.1%, to $1,411.20 a troy ounce by 10:01 AM ET (14:01 GMT). The precious metal had been trading higher ahead of the retail sales data but hit intraday lows of $1,408.95 following the retail sales release.

“China data is supporting industrial metals while a crowded gold long is being reduced,” Hansen said following the consumer data.

The reading did little to unravel expectations for the Federal Reserve to cut rates at the end of the month, although it does support Fed Chairman Jerome Powell’s perception that consumer spending remains healthy in light of a strong labor market.

A later flat reading of U.S. industrial production in June, missing even the forecast for weak growth of 0.1%, briefly pulled gold back from intraday lows in a short-lived recovery.

John Reade, chief market strategist of the World Gold Council, warned that “if gold is going to move, one thing that does concern me is that the speculators on Comex remain very long.”

In other metals trading, silver futures rose 1.9% at $15.652 a troy ounce by 10:03 AM ET (14:03 GMT).

Palladium futures declined 0.9% to $1,549.05 an ounce, while sister metal platinum gained 0.9% to $852.50.

In base metals, copper traded up 0.4% to $2.722 a pound.

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