On Wednesday, gold prices pushed higher but remained below the $1,300 level after slumping on Tuesday as strength in the dollar and U.S. government bond yields prompted investors to sell off the yellow metal.
For June delivery, gold futures on the Comex division of the New York Mercantile Exchange were up $4.90 or 0.38% to $1,295.20 a troy ounce by 04:25 AM ET (08:25 AM GMT) among short covering.
On Tuesday, gold settled at $1,292.30, the lowest close since December 28, down 1.84% for the day.
After a U.S. retail sales report indicated that consumer spending is on track to rebound after a soft patch in the first quarter, underlining expectations for continued economic growth, the dollar rallied to five-month highs on Tuesday.
Also the dollar was boosted by the surge in U.S. Treasury yields following the report, as traders continued to price in a faster pace of rate hikes by the Federal Reserve this year.
The yield on 10-year U.S. Treasury notes rose as high as 3.095%, the highest level since August 2011. Bond yields move inversely to prices. The yield subsequently came off that level and was last at 3.067%.
Since the Fed said on at its May meeting that inflation is moving closer to its 2% target, yields have climbing higher. The Fed raised rates in March and projected two more rate hikes this year, although many investors see three hikes as possible.
Higher Treasury yields can spell weakness for gold which, like other commodities, offers no yield, while a stronger U.S. currency makes dollar denominated gold more expensive for overseas buyers.
In other metals trading, July platinum futures added 0.21% to trade at $899.10, while July silver futures were up 0.37% to $16.33 a troy ounce. July copper futures were up 0.36% at $3.067 a pound./investing.com