Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 2.1% to close just above $1,290 as upbeat economic reports boosted Treasury yields and the dollar, eroding demand for alternative stores of value. It was the metal's first close under $1,300 this year.

Retail sales rose 0.3% in April while March's rise was revised from 0.6% up to 0.8%, signaling that the economy is finding its footing after a soft start to the year. The Empire State manufacturing index rose in April, remaining comfortably in expansion although well-below its three-year high from last October. And homebuilder confidence rose in May, suggesting that the housing boom is still rolling.

Yields on benchmark 10-year Treasurys jumped to 3.07%, the highest since June 2011, as the upbeat data raised speculation that the Fed may hike interest rates more aggressively this year to head off inflation. Reports that the US and China are still "very far apart" on resolving trade tensions also supported higher yields. A trade war with China would likely drive up inflation, causing fixed-income assets to lose their attractiveness, leading bondholders to sell.

The dollar rallied along with yields, picking up nearly 0.7% against major rivals. A stronger dollar weighs on gold and other commodities by making them more expensive overseas. boosted inflation-expectations, prompting bondholders to sell, lowering prices and boosting yields.

The other precious metals were also sharply lower, with silver losing 2.3% while platinum and palladium dropped 1.9% and 1.3%, respectively.

At the Comex close: June gold fell $27.90 to $1,290.30; July silver slid 38 cents to $16.27; July platinum lost $17.70 to $897.20; and June palladium shed $12.50 to $983.20 an ounce.