Gold Plummets To End Below $2010 As Dollar Strengthens

(RTTNews) - Gold futures snapped a five-day gain to end at a one-week low on Tuesday, after the dollar trended sharply higher against a basket of select currencies after some upbeat economic news from the U.S.

The precious metal dropped further after a Commerce Department report showed new residential construction in the U.S. increased significantly in April, with housing starts jumping to its highest level in over seven years.

Gold prices were unable to build on last week's gains as the dollar found its footing versus the euro.

Dollar-back commodities were stung by dovish comments from European Central Bank executive board member Benoit Coeure, who said the ECB will "frontload" its asset purchases in May and June to offset a lack of liquidity in the summer months.

Gold for June delivery, the most actively traded contract, plunged $20.90 or 1.7 percent to settle at $1,206.70 an ounce, on the Comex division of the New York Mercantile Exchange on Tuesday.

Gold for June delivery scaled an intraday high of $1,225.50 and a low of $1,205.10 an ounce.

On Monday, gold futures ended higher at $1,227.60, up $2.30 or 0.2 percent, after some disappointing economic data from the U.S. with homebuilder confidence dropping more than expected in May, boosting expectations of a further delay in a Federal Reserve interest rate hike.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, dropped to 718.24 tons from its previous close of 723.91 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 95.33 on Tuesday, up from its previous close of 94.16 on Monday in late North American trade. The dollar scaled a high of 95.47 intraday and a low of 94.09.

The euro trended lower against the dollar at $1.1150 on Tuesday, as compared to its previous close of $1.1317 in North American trade late Monday. The euro scaled a high of $1.1327 intraday and a low of $1.1120.

On the economic front, new residential construction in the U.S. increased significantly in April, a report from the Commerce Department showed Tuesday, with housing starts jumping to their highest level in over seven years.

The report said housing starts surged up 20.2 percent to an annual rate of 1.135 million in April from the revised March estimate of 944,000. Economists expected housing starts to climb to a rate of 1.029 million from the 926,000 originally reported for the previous month.

The Commerce Department also said building permits increased 10.1 percent to an annual rate of 1.143 million in April from the revised March rate of 1.038 million. Building permits, an indicator of future housing demand, had been expected to climb to 1.070 million from the 1.039 million originally reported for the previous month.

German economic sentiment declined more-than-expected to a 5-month low in May, as the lackluster first quarter growth figure weighed on economic outlook, survey results from the Mannheim-based Centre for European Economic Research, or ZEW, showed Tuesday.

The ZEW Indicator of Economic Sentiment fell sharply to 41.9 from 53.3 in April. This was the lowest reading since December 2014. Economists had forecast a much smaller drop in the index to 49.

The number of persons in employment in Germany continued to increase in the first quarter, albeit at a slower pace, preliminary figures from Destatis showed Tuesday. Total number of employed persons in the country rose 0.7 percent, or by 275,000 persons, to 42.4 million in the first quarter from the corresponding period last year. In the fourth quarter, the increase was 0.9 percent.

Eurozone merchandise trade surplus increased notably in March from a year ago, as exports grew faster than imports, preliminary figures from Eurostat showed Tuesday. The unadjusted trade surplus advanced to EUR 23.4 billion in March from EUR 16.1 billion in the same month of the previous year.

Eurozone annual inflation remained flat in April as initially estimated after falling for four straight months, final data published by Eurostat showed Tuesday. Harmonized consumer prices fell 0.1 percent in March and 0.3 percent in February. The European Central Bank targets inflation below, but close to, 2 percent over the medium term.

U.K. inflation unexpectedly turned negative for the first time since 1960 on falling food and transport costs, official data showed Tuesday. Factory gate prices continued its downward trend reflecting lower crude prices.

Data from the Office for National Statistics showed that consumer prices fell 0.1 percent in April from last year, while it was forecast to remain flat as seen in March. This was the first annual fall since the official series started in 1996. Based on the comparable estimates, it was the first drop since 1960.

House price inflation in the U.K accelerated notably in March, after easing in the previous five months, the Office for the National Statistics said Tuesday. Average house prices climbed 9.6 percent year-over-year in March, faster than February's 7.4 percent growth, which was revised from a 7.2 percent rise estimated earlier.