A stronger dollar and a positive U.S. durable goods order report also drew investors away from gold and into stocks today.
The U.S. Commerce Department reported Wednesday morning that orders to U.S. factories for long-lasting manufactured goods spiked by the largest amount in 13 months. The data revealed orders for durable goods increased 2% in July, following a 4.1% gain in June.
The upbeat report helped lead to Wednesday's rally on Wall Street. Just before noon, the Dow, S&P 500, and Nasdaq were all up roughly 1.5%.
Today's rally came after the Dow lost nearly 800 points over the past two days. Tuesday's close put the blue-chip benchmark's year-to-date loss at 12.10%, firmly in correction territory. The S&P 500 and Nasdaq finished Tuesday with year-to-date losses of 9.3% and 4.8%, respectively.
Even safe-haven gold fell Tuesday. Gold prices ended yesterday's session down $15.20, or 1.32%, at $1,138.20.
Concerns over a stock market swoon and slowdown in China, the world's second-largest economy, have created extreme volatility in the markets. Over the last five days, the Shenzhen Composite is down 23.7%.
Panicked investors have fled nearly all assets classes, including gold, amid the global market sell-off. Commodities have fallen hard in recent weeks as concerns mount that a slowdown in China will dampen the country's appetite for everything from oil to copper to gold.
Currently, China accounts for 23% of the world's gold consumption.
Even dovish comments Wednesday from Federal Reserve Bank of New York President William Dudley didn't help gold prices today.
During a news conference in New York City Wednesday morning, Dudley said prospects of a U.S. central bank rate rise next month have dimmed amid rising concerns about events happening outside of America's borders.
The Fed voting member added that boosting short-term rates off their current levels at the mid-September meeting now looks "less compelling" in light of the market's volatility and worrisome news out of China.
Around 1 p.m., Wednesday's gold price was off $15.20, or 1.33%. That put the gold price's year-to-date decline at 5.18%.
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- Bloomberg: Fed's Dudley Says Decision on September Liftoff Less Likely
- The Wall Street Journal: Market Data
- CNBC: U.S. Durable Goods Orders Up 2% in July