Gold Ends Higher On Weak Dollar, Global Bond Sell-Off

(RTTNews) - Gold futures ended higher on Tuesday, as investors sought the safe haven of the metal with the dollar weakening after continued sell-off in global bonds weighed on markets.

European bonds tumbled with selling sparked by yesterday's weakness in the U.S. Treasury market, as 10-year yields jumped to its highest closing level in over five months. The yields further increased Tuesday to a six-month high, but dropped slightly thereafter.

Meanwhile, Federal Reserve official William Dudley, who once pushed for a mid-summer rate hike, now says he is not sure when the central bank will begin tightening.

"Market participants now seem to share" policymakers' idea "that lift-off is likely to begin sometime later this year." However, "To be as direct as possible: I don't know when this will occur," he added.

Despite April's strong jobs report, Fed officials may want a few more months of upbeat data before they are convinced the winter economic lull was an aberration.

Greek finance ministry official said the order for the repayment of 750 million euros has been executed on Monday, with Athens having to dig deep into an emergency account to make the interest payment on its debt to the International Monetary Fund.

Greek Finance Minister Yanis Varoufakis described the financial situation of his country as an urgent issue. "We are talking about the next couple of weeks."

Gold has been stuck in a stubborn range near $1200 since April.

Gold for June delivery, the most actively traded contract, gained $9.40 or 0.8 percent to settle at $1,192.40 an ounce, on the Comex division of the New York Mercantile Exchange on Tuesday.

Gold for June delivery scaled an intraday high of $1,196.30 and a low of $1,179.70 an ounce.

On Monday, gold futures dropped $5.90 or 0.5 percent to settle at $1,183.00 an ounce, on investor focus on the Greek financial crisis with Athens due to pay back some big debt interest to the IMF. The Chinese stimulus failed to trigger any fresh buying over the weekend.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 728.32 tons from its previous close of 739.06 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 94.45 on Tuesday, down from its previous close of 95.02 on Monday in late North American trade. The dollar scaled a high of 95.16 intraday and a low of 94.24.

The euro trended higher against the dollar at $1.1236 on Tuesday, as compared to its previous close of $1.1155 in North American trade late Monday. The euro scaled a high of $1.1279 intraday and a low of $1.1135.

On the economic front, U.K. industrial production unexpectedly grew in March for a second straight month, led by a robust gain in oil and gas extraction and stronger manufacturing output, giving some respite from concerns of a slowdown in the economic growth momentum.

Industrial production rose 0.5 percent from February, when it edged up 0.1 percent, data from the Office for National Statistics revealed Tuesday. Economists had forecast stagnation for the month. The latest growth rate was the strongest since September last year, when production grew 0.6 percent.

The leading index for Japan, which measures the future economic activity, increased as expected in March, preliminary figures from the Cabinet Office showed Tuesday. The index rose to 105.5 in March from 104.7 in the previous month, in line with economists' expectations. The reading was also at its highest since September last year, when it was 105.8.

The Organization for Economic Co-operation and Development's leading index signaled a stable growth momentum in the region and a positive change in growth momentum in the euro area.

The OECD's composite leading indicator, designed to anticipate economic turning points in economic activity, came in at 100.1 in April, down slightly from 100.2 in February. Stable growth momentum was also observed in Japan, Germany, India and the United Kingdom.

In the euro area, signs of positive growth momentum in seen especially in France and Italy, the OECD said. The index suggested easing growth momentum for the United States and China, while in Russia the index continues to point to a loss in growth momentum.