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Gold falls on ECB easing prospects, shrugs off U.S. retail sales data

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Shutterstock photo - - Gold prices edged lower in U.S. trading on Tuesday after investors shrugged off sluggish U.S. retail sales and avoided the yellow metal on expectations for the European Central Bank to loosen policy in June, which sent the U.S. dollar rising.

Gold and the dollar tend to trade inversely with one another.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at 1,293.70 a troy ounce during U.S. trading, down 0.16%, up from a session low of $1,289.20 and off a high of $1,298.80.

The June contract settled up 0.64% at $1,295.80 on Monday.

Futures were likely to find support at $1,278.30 a troy ounce, Monday's low, and resistance at $1,303.90, Monday's high.

The Wall Street Journal reported the German central bank Bundesbank would back monetary easing measures, including a negative rate on bank deposits and purchases of packaged bank loans, if such tools were needed to keep persistently low levels of inflation from becoming entrenched in the euro zone.

Last week, ECB President Mario Draghi said monetary authorities were "comfortable" with acting at its next meeting in June after reviewing the latest economic projections, and the euro fell on sentiments that European monetary policy is set to loosen, which strengthened the dollar and chipped away at demand for gold.

The single currency also came under pressure after data showed that German economic sentiment slumped to a 16-month low in May.

The ZEW Centre for Economic Research reported that its index of German economic sentiment dropped to 33.1 this month from 43.2 in April. Analysts had expected a reading of 41.0.

The current conditions index improved to 62.1 from 59.5 in April, ahead of expectations of 60.5.

Meanwhile in the U.S., soft retail sales numbers did little to bolster gold.

The Commerce Department reported earlier that U.S. retail sales rose just 0.1% in April, missing expectations for a 0.4% increase. Retail sales for March were revised up to a 1.5% gain from a previously reported increase of 1.2%.

Core retail sales, which exclude automobile sales, were flat in April, disappointing forecasts for a 0.6% increase. Core sales in March were revised up to a rise of 1% from a previously reported increase of 0.7%

Meanwhile, silver for July delivery was flat at $19.543 a troy ounce, while copper futures for July delivery were down 0.64% at $3.129 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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