Investing.com - Losses for gold and silver deepened on Tuesday, as growing speculation that the Federal Reserve will make a further reduction in monetary stimulus in the near-term dampened the appeal of the precious metals.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,238.40 a troy ounce during U.S. morning trade, down 1.1%.
Gold prices hit a session low of USD1,235.60 a troy ounce earlier, the weakest level since January 15.
There was no settlement on the Comex on Monday as floor trading remained closed due to the Martin Luther King Jr. Day holiday. Monday’s transactions will be booked today for settlement purposes.
Futures were likely to find support at USD1,227.00 a troy ounce, the low from January 10 and resistance at USD1,261.30, the high from January 19.
Meanwhile, silver for March delivery tumbled 2.5% to trade at USD19.79 a troy ounce. Comex silver prices fell by as much as 3% earlier in the session to hit a daily low of USD19.69 a troy ounce, the weakest since January 19.
Silver futures were likely to find support at USD19.54 a troy ounce, the low from January 10 and resistance at USD20.42, the high from January 17.
Demand for the U.S. dollar was underpinned by expectations that the Fed will continue tapering its stimulus program at the outcome of its next policy meeting on January 29 to USD65 billion from the current USD75 billion.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.2% to trade at 81.40, the highest since November 12.
A stronger U.S. dollar usually weighs on gold and silver as it dampens the metals’ appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Elsewhere on the Comex, copper futures for March delivery fell 0.6% to trade at USD3.325 a pound.
Data on Monday showed that China’s economy expanded at an annual rate of 7.7% in the fourth quarter, down from 7.8% in the three months to September.
A separate report showed that industrial production in China rose by an annualized rate of 9.7% in December, compared to expectations for a 9.8% increase, after a 10% gain in the previous month.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.