Investing.com - Gold prices languished near the lowest level in more than five years on Tuesday, after data showed U.S. consumer price inflation rose in line with expectations in October, while prices excluding food and energy costs inched up modestly.
Gold for December delivery on the Comex division of the New York Mercantile Exchange dipped $5.30, or 0.49%, to trade at $1,078.30 a troy ounce during U.S. morning hours. It earlier fell to $1,075.60, hovering just above last week's lows of $1,073.00, a level not seen since February 2010.
The U.S. Commerce Department said consumer prices increased 0.2% last month, matching forecasts and following a fall of 0.2% in September.
Year-over-year, consumer prices were 0.2% higher from the same month a year earlier, compared to expectations for a 0.1% increase and after holding flat in September.
Consumer prices, excluding food and energy costs, rose 0.2%, meeting expectations. Core consumer prices rose 0.2% in September. On an annualized rate, core CPI increased 1.9% last month, in line with expectations and unchanged from the prior month.
Core prices are viewed by the Federal Reserve as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories. The central bank usually tries to aim for 2% core inflation or less.
The U.S. dollar rose to fresh seven-month highs against a basket of six other major currencies amid growing expectations for tighter monetary policy in the U.S. in the coming months.
Dollar-priced commodities become more expensive to investors holding other currencies when the greenback gains.
Gold prices have lost nearly 9% since mid-October as market players prepared for a hike in interest rates by the Federal Reserve next month.
Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.
On Monday, gold tacked on $2.70, or 0.25%, as investors weighed the potential consequences of a series of terrorist attacks that took place in Paris on Friday night that left at least 132 people dead and more than 350 wounded.
Elsewhere in metals trading, copper prices fell to the lowest level since May 2009 on Tuesday, as the possibility of higher interest rates in the U.S. and slower global economic growth, particularly in China, weighed.
Prices of the red metal are down almost 30% since May as fears of a China-led global economic slowdown spooked traders and rattled sentiment.
The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.