Investing.com - Gold prices struggled near the lowest level in more than five years on Tuesday, as investors looked ahead to U.S. inflation data later in the session for further clues on the likelihood of a December rate hike.
Gold for December delivery on the Comex division of the New York Mercantile Exchange shed $4.70, or 0.43%, to trade at $1,078.90 a troy ounce during European 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.
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.
The Commerce Department will publish inflation figures for October at 8:30AM ET Tuesday. The consensus forecast is that the report will show consumer prices rose 0.2% last month, after falling 0.2% in September. Core inflation is forecast to increase 0.2%, after gaining 0.2% a month earlier.
Weak inflation, due largely to lower oil prices, has been one of the key reasons for the Fed’s reluctance to raise interest rates so far this year.
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.
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.
Disappointing Chinese data on trade activity, inflation and industrial production last week 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.
The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.