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Gold Prices Settle Below $1,600 (Update 2)

Updated from 12:13 p.m. ET with settlement prices

NEW YORK ( TheStreet) -- Gold prices settled below $1,600 an ounce on Tuesday for the first time since March 15 after durable goods orders came in better than expected and a slew of other economic indicators suggested continued growth in the U.S. economy.

Gold for April delivery shed $8.80 to settle at $1,595.70 an ounce at the COMEX division of the CME. The gold price traded as high as $1,605 and as low as $1,593.40 an ounce, while the spot price was dipping $5.80, according to Kitco's gold index.

"Durable goods data that we had today was quite a bit stronger than forecast, so again it points towards a pick-up in overall macroeconomic activity, and gold obviously suffering as a consequence," said James Moore, an analyst at FastMarkets.com in London.

Silver prices for May delivery lost 14 cents to $28.68 an ounce, while the U.S. dollar index was slightly higher by 0.01% to $82.90.

The Census Bureau reported on Tuesday that durable goods orders rose 5.7% in February, better than a consensus among economists who had expected a 3.8% rise. Excluding transportation, orders lost 0.5% in February against a prior-revised 2.9% gain in January. Economists had expected ex-transportation orders to tick higher by 0.7%.

The uptick in new orders placed with domestic manufacturers suggested a continued slow recovery in the manufacturing sector.

Housing data emerged Tuesday, along with a consumer confidence read, all of which suggested a steady climb in the U.S. economy.

The S&P Case-Shiller home price index printed a year-over-year increase of 8.1% in January to make it the strongest read on the indicator since the beginning of the downturn of the housing sector in mid-2006.

New home sales in February declined to 411,000 against January, but rose 12.3% against the same time last year.

The Conference Board said Tuesday its Consumer Confidence Index fell to 59.7 in March, down from 69 in February, but this dip may not have been a complete surprise.

"I don't think it's all that surprising; the magnitude of the drop was a little bit surprising, but with payroll tax increases really starting to take effect and for consumers to realize what it means to their paycheck, it was not ," said Brad Sorensen, market and sector research director at Charles Schwab. "I think it took a few paychecks for that to really start to impact consumer confidence."

Gold prices also witnessed a drop on Tuesday as excess hedges sold off a day after option expiration.

"There have been hedges," George Gero, senior vice president, global futures at RBC Capital Markets, said in an interview. "There have been put buyers -- a large quantity at $1,575 -- and those puts ... went without becoming futures contracts today, and then we had call buyers at $1,600 and those options also did not become futures contracts today."

Gero explained that traditionally the morning after option expiration, investors who were hedging and had sold options against buyers of those options sold off their excess inventories.

Gold prices settled below the psychological threshold of $1,600 an ounce for the first time since March 15. The yellow metal had tested that mark on Monday, before closing slightly above that level.

Gold mining stocks were mostly lower on Tuesday. Shares of Eldorado Gold (EGO) were sliding 2.8%, and shares of Kinross Gold (KGC) were off 1.3%.

Among volume leaders, Yamana Gold (ABX) were slipping 1%.

Gold ETF SPDR Gold Trust (GLD) was down 0.37%, while iShares Gold Trust (IAU) was decreasing 0.32%.

-- Written by Joe Deaux in New York.

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