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Gold ends three-day slump, amid stronger dollar and U.S. factory orders

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Shutterstock photo - -- Gold futures rebounded on Monday to pare some of the gains from an extended slump late last week, amid a stronger dollar boosted by optimistic U.S. factory orders data.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery rose 14.30 or 1.23% to 1,189.00. After hitting a one-month low last Friday, gold remained flat at 1,176.60 before rising to a session-high of 1,192.10 in U.S. morning trading.

At last week's close, gold ended the week on a three-day slump capping a choppy stretch of trading when it gained more than 2.35% on April 27 before reversing nearly all of the gains two sessions later. Although a relatively dovish Fed removed all calendar references on a potential interest rate hike from its monetary policy at its April meeting last week, it still has not ruled out June for a lift-off date. On Friday, Federal Reserve of Cleveland president Loretta Mester said June is still "on the table" for a rate increase.

Gold likely gained support at 1,174.00, the low from May. 1 and met resistance at 1,198, the high from April 16. Following last week's meeting, the Federal Open Market Committee reiterated that it will take a data-driven approach to the timing of its first interest rate hike since the end of the Financial Crisis.

On Monday, the U.S. Census Bureau said in a monthly report that factory orders for the month of April soared 2.1%, above estimates of a 2.0% gain. Bolstered by a surge in aircraft, motor vehicle and energy equipment orders, the reading posted its first gain in eight months. In March, U.S. factory orders fell slightly by 0.1%, underscoring crashing oil prices and a dip in exports due to the stronger dollar. Elsewhere, the Federal Reserve of Atlanta's GDP Now model forecast growth of 0.8% for the second quarter, amid a decline in nonresidential structures investment by approximately 20%. The forecasts fall dramatically below consensus estimates of 3.3% for the period. For the first quarter, the Atlanta Fed predicted a paltry gain of 0.2%, in line with actual figures released last week.

Gold, which is not attached to interest rates or dividends, struggles to compete with high yield bearing assets in periods of rising rates.

In China, factory orders experienced their biggest monthly decline in a year as new orders shrunk significantly. The HSBC /Markit Purchasing Managers Index fell to 48.9 in April, down from 49.6 a month earlier raising the possibility of additional stimulus in the world's second-largest economy. China is the world's largest producer and second-largest consumer of gold in the world.

In addition, silver for July delivery surged 0.382 or 2.37% to 16.517 a troy ounce.

Copper for July delivery fell 0.010 or 0.35% to 2.919 a pound. offers an extensive set of professional tools for the financial markets.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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