On Tuesday gold prices surged, as a broadly weaker U.S. dollar fuelled the appeal of the yellow metal, while investors eyed gains in global bond yields.
On the Comex division of the New York Mercantile Exchange, gold futures
for June delivery jumped $10.30, or 0.87%, to trade at $1,193.30 a troy
ounce during U.S. morning hours after hitting a session high of
$1,196.00.
Yesterday gold dropped $5.90, or 0.5%, to close at $1,183.00. Prices were likely to find support at $1,168.40, the low from May 1, and resistance at $1,199.30, the high from May 5.
Silver futures for July delivery tacked on 8.1 cents, or 0.5%, to trade at $16.39 a troy ounce. On Monday, silver slumped 15.1 cents, or 0.92%, to end at $16.31.
Weakness of the greenback usually benefits gold, as it bolsters the metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.
A renewed selloff in global government bond prices dominated market participants' attention. The yield on
the benchmark 10-year Treasury rising 5.9 basis points to
2.331%, the highest point since Nov. 21.
Jitters over Greece came back in the markets after Athens repaid a €770 million loan installment to the International Monetary Fund early Tuesday, easing concerns that it was on the verge of default.
The nation is scraping through to reach a deal with its international creditors on a package of economic reforms in order to access fresh bailout funds and avert a liquidity crunch.
Market players looked ahead to Wednesday's U.S. retail sales report for April, for fresh indications on the strength of the economy and the timing of a U.S. rate increase.
Recent economic reports have indicated that the economy has slowed since the start of the year, prompting many investors to push back expectations on the timing of an initial rate hike by the Fed.
Elsewhere in metals trading, copper for July delivery rose 3.2 cents, or 1.1%, to trade at $2.935 a pound.
As a response to weaker-than-expected economic activity data, which has raised concerns that the government's annual gross domestic growth (GDP) target of "around 7 percent" could be at risk, China's central bank reduced both the benchmark lending and deposit rate by 25 basis points to 5.1 percent and 2.25 percent, respectively.
Market
participants now awaited a batch of Chinese economic data due on
Wednesday for indications on the strength of the economy and the
future path of monetary policy.
The Asian nation will release data on industrial production, retail sales and fixed-asset investment for April.
