Investing.com - Gold prices fell on Monday after a solid U.S. inflation report confirmed market sentiments for the Federal Reserve to close its bond-buying program this month and hike interest rates next year, which fueled demand for the dollar.
Gold and the dollar tend to trade inversely with one another.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at $1,244.90 a troy ounce, down 0.54%, up from a session low of $1,241.70 and off a high of $1,250.20.
The December contract settled up 0.56% at $1,251.70 on Tuesday.
Futures were likely to find support at $1,232.00 a troy ounce, Friday's low, and resistance at $1,255.60, Tuesday's high.
The Labor Department reported earlier that U.S. consumer price index rose 0.1% in September, meeting estimates and following a 0.2% decline in August, which sent investors flocking to the greenback.
Year-over-year, consumer prices rose 1.7% in September, beating expectations for a 1.6% reading.
Core consumer prices, which exclude food and energy costs, rose 0.1% in September, disappointing expectations for a 0.2% gain. Core consumer prices were flat in August, though the overall report confirmed market expectations for the Federal Reserve to make monetary policy less accommodating going forward.
Prices didn't plummet, however, as expectations for the European Central Bank to loosen policy bolstered the commodity's safe-haven appeal.
The euro came under pressure after Reuters reported earlier this week that the European Central Bank may purchase corporate debt to boost slowing inflation rates in the euro area and kick start recovery.
The report said the bank could activate the new stimulus plan as soon as December and begin bond purchases by early next year.
The ECB began purchasing covered bonds on Monday in a bid to increase liquidity in the region, and talk of fresh stimulus programs softened the euro.
An ECB spokesperson said no decision had been taken but the report was seen as an indication that the bank is moving closer to purchasing government debt.
Reports by Spanish news agency Efe that at least 11 European banks are set to fail ECB stress tests this weekend also hit demand for the euro.
The ECB was to announce the results of stress tests on 130 banks on Sunday.
Meanwhile, silver for December delivery was down 2.09% at $17.182 a troy ounce, while copper futures for December delivery were down 0.48% at $3.014 a pound.