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Gold futures hit session lows after U.S. inflation report

Published 10/22/2014, 08:54 AM
Updated 10/22/2014, 08:54 AM
Gold falls to session lows after U.S. inflation data

Gold falls to session lows after U.S. inflation data

Investing.com - Gold prices extended losses on Wednesday to hit the lowest levels of the session after data showed that consumer price inflation in the U.S. rose marginally last month.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at $1,244.00 a troy ounce during U.S. morning hours, down $7.70, or 0.62%.

A day earlier, gold prices hit a six-week high of $1,255.60 an ounce, before trimming gains to settle at $1,251.70, up $7.00, or 0.56%.

Futures were likely to find support at $1,222.00, the low from October 15, and resistance at $1,257.60, the high from September 10.

Also on the Comex, silver futures for December delivery shed 27.9 cents, or 1.59%, to trade at $17.27 a troy ounce.

The U.S. Department of Labor said that consumer prices increased by a seasonally adjusted 0.1% in September, meeting estimates and following a 0.2% decline in August.

Year-over-year, consumer prices rose at an annualized rate of 1.7% in September, above expectations for a 1.6% reading.

Consumer prices, excluding food and energy costs, increased by a seasonally adjusted 0.1% in September, disappointing expectations for a 0.2% gain.

Core CPI increased at annualized rate of 1.7% in August, in line with forecasts and unchanged from August.

The relatively positive consumer price inflation data pushed the greenback higher against a basket of other major currencies, dampening the appeal of the precious metal.

Prices remained supported amid reports that the European Central Bank is considering buying corporate bonds.

The move would add to covered bond purchases the central bank began earlier this week in an effort to increase liquidity in the region and spur economic activity.

Expectations of monetary stimulus tend to benefit gold, as the metal is seen as a safe store of value and inflation hedge.

Elsewhere in metals trading, copper for December delivery inched up 0.6 cents, or 0.2%, to trade at $3.034 a pound.

Copper traders awaited China's HSBC's flash manufacturing purchasing manager's index report for September on Thursday for fresh indications on the health of the economy.

A government report on Tuesday said that China’s economy expanded at an annual rate of 7.3% in the third quarter, down from growth of 7.5% in the preceding quarter.

While the figure exceeded market expectations of 7.2%, it was also the slowest expansion since the first quarter of 2009.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption.

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