Gold prices drifted lower on Tuesday, pushing the most active gold futures contracts to a weak close for a third consecutive session, as the yields on long term bonds rose and the dollar gained against its peers.<\/p>\n
Traders looked ahead to the Federal Reserve’s monetary policy announcement due on Wednesday.<\/p>\n
The dollar index, which rose to 90.68 around mid-morning from a low of 90.35 touched in the Asian session, pared gains and dropped down to 90.52 subsequently.<\/p>\n
The yield on U.S. 10-year Treasury Note rose to 1.51%.<\/p>\n
Gold futures for August ended lower by $9.50 or about 0.5% at $1,856.40 an ounce, the lowest close since May 14.<\/p>\n
Silver futures for July ended down by $0.346 or 1.2% at $27.693 an ounce, while Copper futures for July settled at $4.3330 per pound, down $0.1940 or more than 4% from the previous close.<\/p>\n
It is widely expected that the Fed won’t make any changes to monetary policy but could signal that it is beginning to think about scaling back its asset purchases.<\/p>\n
The Fed announcement on Wednesday is likely to acknowledge the recent increase in inflation, which was highlighted by today’s Labor Department report showing record annual producer price growth.<\/p>\n
The report said the producer price index for final demand advanced by 0.8% in May after climbing by 0.6% in April. Economists had expected another 0.6% increase.<\/p>\n
Compared to the same month a year ago, producer prices in May were up by 6.6 percent, reflecting the largest increase since 12-month data were first calculated in November 2010.<\/p>\n
The Commerce Department also released a report showing retail sales tumbled by more than expected in the month of May, falling by 1.3% following an upwardly revised 0.9% increase in April.<\/p>\n
Economists had expected retail sales to slump by 0.8% compared to the unchanged reading originally reported for the previous month.<\/p>\n
The Fed also released a report showing industrial production climbed 0.8% in May after inching up by a revised 0.1% in April. <\/p>\n