Investing.com - Gold prices languished near three-month lows on Tuesday, as market players prepared for a hike in interest rates by the Federal Reserve next month.
Gold for December delivery on the Comex division of the New York Mercantile Exchange inched up $2.70, or 0.25%, to trade at $1,090.80 a troy ounce during European morning hours. A day earlier, gold prices tacked on 40 cents, or 0.04%.
On Friday, prices fell to a three-month low of $1,084.50 after data showing the U.S. economy created more jobs than expected in October bolstered expectations for a rate hike next month.
The likelihood of a December interest rate increase by the Fed surged to 70%, according to Fed funds futures data from the CME Group (O:CME).
The U.S. dollar held near seven-month highs against a basket of six other major currencies amid 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.
Investors now looked ahead to key U.S. data later in the week for further indications on the strength of the economy and the likelihood of a near-term rate hike.
The U.S. is slated to release data on retail sales, producer prices and consumer sentiment on Friday.
Fed Chair Janet Yellen said last week that a December rate hike was a "live possibility" if justified by upcoming economic data.
Gold prices have lost 8.5% since mid-October as investors recalibrated their expectations of U.S. monetary policy in response to hawkish signals from the Fed.
The timing of a Fed rate hike has been a constant source of debate in the markets in recent months.
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.
Elsewhere in metals trading, copper prices slumped to a six-year low after the latest inflation figures out of China added to concerns over the health of the world's second-biggest economy.
The disappointing reports reinforced the view that the economy remains in the midst of a gradual slowdown which will require policymakers in Beijing to roll out more measures to boost growth in coming months.
Market players now looked ahead to data on Chinese industrial production, retail sales and fixed asset investment on Wednesday for further hints on the strength of the world's second-largest economy.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.