Investing.com - Gold prices pushed higher on Wednesday, but remained below the $1,300 level after slumping on Tuesday as strength in the dollar and U.S. government bond yields prompted investors to sell off the yellow metal.
Gold futures for June delivery on the Comex division of the New York Mercantile Exchange were up $4.90 or 0.38% to $1,295.20 a troy ounce by 04:25 AM ET (08:25 AM GMT) amid short covering.
Gold settled at $1,292.30 on Tuesday, the lowest close since December 28, down 1.84% for the day.
The dollar rallied to five-month highs on Tuesday after a U.S. retail sales report indicated that consumer spending is on track to rebound after a soft patch in the first quarter, underlining expectations for continued economic growth.
The dollar was also boosted by the surge in U.S. Treasury yields following the report, as traders continued to price in a faster pace of rate hikes by the Federal Reserve this year.
The yield on 10-year U.S. Treasury notes rose as high as 3.095%, the highest level since August 2011. Bond yields move inversely to prices. The yield subsequently came off that level and was last at 3.067%.
Yields have climbing higher since the Fed said on at its May meeting that inflation is moving closer to its 2% target. The Fed raised rates in March and projected two more rate hikes this year, although many investors see three hikes as possible.
Higher Treasury yields can spell weakness for gold which, like other commodities, offers no yield, while a stronger U.S. currency makes dollar denominated gold more expensive for overseas buyers.
In other metals trading, July silver futures were up 0.37% to $16.33 a troy ounce, while July platinum futures added 0.21% to trade at $899.10. July copper futures were up 0.36% at $3.067 a pound.