NEW YORK (Dow Jones)--Gold futures were retreating as investors prefer Treasurys over the metal as a safe haven amid disappointing economic data.
The most-actively traded gold contract, for August delivery, recently was down $28.50, or 2.3%, at $1,217.40 an ounce on the Comex division of the New York Mercantile Exchange.
Dismal economic data are broadly pressuring markets, but gold isn't receiving its traditional safe-haven bid, even as prices of Treasury securities rise, sending the 10-year and 30-year yields to the lowest level since April 2009.
"Investors are choosing Treasury's over gold," said Tom Pawlicki, precious-metals analyst with MF Global in Chicago.
The poor economic figures may be signaling a deflationary environment, causing participants to prefer Treasury's as a haven over gold, which is often viewed as a hedge against inflation, Pawlicki said.
A survey of U.S. purchasing managers showed manufacturing growth moderated in June. An industry group's index showed U.S. pending home sales plunged 30% in May. An early-morning report showed that U.S. weekly initial jobless claims unexpectedly rose. And the headline number in China's June Purchasing Managers Index fell.
The data reinforce concerns about a slipping global economic recovery.
Such concerns have driven gold to records recently - with the August contract hitting $1,266.50 last week - as it is often viewed as a safe-haven investment.
But "some of the risk money that went into gold is coming out today," said Ira Epstein, director of the Ira Epstein division of the Linn Group in Chicago.
Some of the refuge allure of gold is dimming after a successful EUR3.5 billion Spanish government bond auction sparked confidence in the region's banking system despite a ratings agency's warning a day earlier that Spain credit rating could be downgraded.
Worries over sovereign debt problems in Spain, Greece, Portugal and Hungary have helped fuel safe-haven buying in gold in recent weeks.
-By Matt Whittaker, Dow Jones Newswires; 212-416-2139; matt.whittaker@dowjones.com
