Gold prices drifted lower on Tuesday as the dollar climbed up after data showing hotter-than-expected U.S. inflation raised concerns the Fed might be aggressive with interest rate hike at its upcoming policy meeting next week.
The dollar index, which was down at 107.68 in the European session, climbed to 109.72 later on in the day, lifted by U.S. inflation data.
Gold futures for December ended lower by $23.20 or about 1.3% at $1,717.40 an ounce.
Silver futures for December ended down by $0.369 at $19,491 an ounce, while Copper futures for December settled at $3.5555 per pound, down $0.0550 from the previous close.
Data from the U.S. Labor Department showed the consumer price index inched up by 0.1% in August after coming in unchanged in July. Economists had expected consumer prices to edge down by 0.1%.
Compared to the same month a year ago, consumer prices were up by 8.3% in August, reflecting a slowdown from the 8.5% spike in July. However, economists had expected the annual rate of growth to slow to 8.1%.
Meanwhile, the annual rate of growth by core consumer prices accelerated to 6.3% in August from 5.9% in July. The annual rate of growth was expected to rise to 6.1%.
CME Group's FedWatch Tool is currently indicating a 78% chance of a 75 basis point rate hike and a 22% percent chance of a 100 basis point rate hike.
