Gold Ends Lower As Equities Trend Higher

(RTTNews) - Gold futures ended sharply lower on Tuesday, losing its safe haven appeal as investors turned to the riskier equity assets with energy prices climbing and on hopes that the new government in Greece would be able to renegotiate its bailout terms with international lenders.

The waning safe haven appeal of the precious metal comes despite the dollar taking a sharp dive after data from the U.S. showed factory orders to have dropped more than expected in December.

In some weak economic news from the U.S., a Commerce Department report on Tuesday showed a sharp drop in factory orders for manufactured goods in December, in the latest sign of the economy losing some of the steam.

Meanwhile, the surge in crude oil prices gave an unexpected push for global stocks, with crude prices soaring over speculation of supply cuts due to a significant decline in U.S. drilling activity.

There was little impact on gold prices after Australia cut its benchmark interest rate to a record low of 2.25%. Central banks around the globe are responding to low oil prices by easing monetary policy, but the U.S. Federal Reserve is still expected buck the trend by hiking rates from zero this summer.

Gold for April delivery, the most actively traded contract, shed $16.60 or 1.3 percent to settle at $1,279.20 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday.

Gold for April delivery scaled an intraday high of $1,286.50 and a low of $1,255.80 an ounce.

On Monday, gold ended higher at $1,279.20 an ounce, up $0.70, after some soft economic data from the U.S. showed the economy may be losing some steam.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, moved up to 766.73 tons on Tuesday, from its previous close.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 93.50 on Tuesday, down from its previous close of 94.56 late Monday in North American trade. The dollar scaled a high of 94.70 intraday and a low of 93.46.

The euro trended higher against the dollar at $1.1527 on Tuesday, as compared to its previous close of $1.1341 late Monday in North American trade. The euro scaled a high of $1.1528 intraday and a low of $1.1314.

On the economic front, a report from the Commerce Department Tuesday showed a sharp drop in new orders for U.S. manufactured goods in December, with factory orders tumbling by 3.4 percent, exceeding the 2.2 percent drop forecast by economists.

Eurozone producer prices declined at the fastest pace in five years during December, data from Eurostat showed Tuesday. Producer prices fell 2.7 percent year-on-year in December, faster than the 1.6 percent decline in the previous month. Economists had forecast a 2.5 percent fall for the month.

U.K' s construction sector expansion quickened unexpectedly in January, survey data from Markit Economics showed Monday. The Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index rose to 59.1 in January from the seventeen month low of 57.6 in December. The score was forecast to fall to 57 in January.

Consumer price inflation in the developed economies was at its lowest in five years during December, due mainly to falling energy prices, data from the Organization for Economic Cooperation and Development (OECD) revealed Tuesday. The consumer price index climbed 1.1 percent annually in December following 1.5 percent rise in November. This was the lowest since October 2009, when prices rose just 0.2 percent.

From Asia, China's current account surplus dropped to $61.1 billion in the fourth quarter, the State Administration of Foreign Exchange said Tuesday. Meanwhile, the capital account showed a deficit of $91.2 billion. For the full year 2014, China recorded a surplus of $213.8 billion and a shortfall of $96 billion on the capital account.