Gold, silver remain sharply lower after CPI data

Investing.com - Gold and silver prices remained sharply lower on Tuesday, following the release of U.S. inflation data, while investors awaited the outcome of the Federal Reserve's highly anticipated policy meeting on Wednesday.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,233.10 a troy ounce during U.S. morning trade, down 0.9%. Comex gold prices traded in a range between USD1,229.60 a troy ounce and USD1,247.50 a troy ounce.

Gold futures were likely to find support at USD1,219.50 a troy ounce, the low from December 13 and resistance at USD1,256.50, the high from December 12.  The February contract settled 0.79% higher on Monday to end at USD1,244.40 a troy ounce.

Meanwhile, silver for March delivery tumbled 1.5% to trade at USD19.80 a troy ounce. Comex silver prices held in a range between USD19.68 a troy ounce and USD20.22 a troy ounce.

Precious metals held on to heavy losses after data showed that consumer price inflation in the U.S. was flat in November, while prices excluding food and energy costs inched up modestly.

In a report, the U.S. Department of Labor said that consumer prices were unchanged last month, compared to expectations for a 0.1% increase, after falling 0.1% in October.

Year-over-year, consumer prices rose at an annualized rate of 1.2% in November, up from 1% in October and below forecasts for a 1.3% increase.

Consumer prices, excluding food and energy costs, inched up 0.2% last month, above forecasts for a 0.1% gain. Core consumer prices rose 0.1% in October. Core CPI increased at annualized rate of 1.7% last month, unchanged from October and in line with expectations.

Core prices are viewed by the Federal Reserve as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories. The central bank usually tries to aim for 2% core inflation or less.

Investors remained cautious ahead of the outcome of the Fed’s two-day policy meeting on Wednesday, with some expecting the central bank to announce a small reduction in the pace of its USD85 billion-a-month asset purchase program.

Gold is down approximately 26% this year, while silver has lost nearly 35%, as solid U.S. economic data underlined expectations the Fed will begin curbing stimulus.

Elsewhere on the Comex, copper futures for March delivery inched down 0.15% to trade at USD3.325 a pound.

The industrial metal rallied to a seven-week high of USD3.335 a pound on Monday after upbeat manufacturing data out of the euro zone and the U.S. boosted optimism over the global economy.