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Gold climbs toward key resistance at $1,900 on drop in U.S. consumer confidence

Gold futures moved higher Tuesday to make a play for $1,900 an ounce, a key price resistance level, as data show monthly declines in U.S. consumer confidence and new home sales, boosting the precious metal’s appeal as a haven investment.

U.S. consumer confidence survey slipped to 117.2 in May from a revised 117.5 in the prior month, according to the Conference Board Tuesday. The index was forecast to decline slightly to 119.5 based on a survey of economists compiled by Dow Jones and The Wall Street Journal.

New home sales, meanwhile, fell by nearly 6% in April to 863,000 annual rate, Census Bureau said. The median forecast of economists polled by MarketWatch was 959,000.

However, the S&P CoreLogic Case-Shiller national house price index showed a rise of 13.2% in the year to March for existing homes, the highest annual gain since December 2005.

Against that backdrop, June gold
GCM21,
+0.36%

GC00,
+0.36%

was up $8.50, or 0.5%, at $1,893 an ounce after trading as high as $1,896.80. Prices had been trading mostly lower before the economic data, marking an intraday low at $1,873.20. They rose 0.4% on Monday to post the highest most-active contract settlement since Jan. 7, FactSet data show.

July silver
SIN21,
+0.45%

SI00,
+0.45%
,
meanwhile, was up 13.5 cents, or 0.5%, at $28.04 an ounce, after rising 1.5% on Monday.

“Good action from outside catalysts for gold and silver…as the U.S. dollar and Treasury yields continue to decline,” James Hatzigiannis, chief market strategist at Ploutus Capital Advisors, told MarketWatch.

“We are bullish on gold and silver as we see the economy starting to open up and money flowing out of cryptos into more safe-haven plays like gold and silver,” he said, adding that gold may soon top $1,900 as gold prices “have been holding up even with the threats of China to deflate prices.”

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In Tuesday dealings, the dollar, as measured by the ICE U.S. Dollar Index 
DXY,
-0.17%
,
was off 0.2% at 89.691. A weaker dollar can make assets priced in the currency more attractive to overseas buyers.

The 10-year Treasury yield 
TMUBMUSD10Y,
1.586%

was around 1.577%, near the lowest level for the benchmark bond since early May. Falling yields can benefit precious metals and other commodities, which don’t offer a coupon, by reducing the opportunity cost of holding them against yield-bearing assets.

“With the economy almost at full capacity, we believe that will spike the classic demand back into gold and silver,” said Hatzigiannis. “Combined with lower yields and a decline in the dollar, gold and silver are sitting pretty, and it would take an unprecedented news headline for gold to break to the downside here.”

“I see strong holders in this area and more big money flowing into these two commodities,” he said. “We like the technicals and the fundamentals are finally starting to favor gold and silver.” 

Among other metals, July copper
HGN21,
+0.11%

added 0.1% to $4.53 a pound. July platinum
PLN21,
+0.93%

tacked on 1% to $1,188.90 an ounce and June palladium
PAM21,
+1.18%

rose 1.2% to $2,760 an ounce. September palladium
PAU21,
+1.18%
,
which also among the most active, traded at $2,773 an ounce, up 1.2%.

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