Gold trims losses after U.S. retail sales data, FOMC meeting ahead

Investing.com - Gold prices remained lower on Tuesday, albeit off the lowest levels of the session, as disappointing U.S. economic data reinforced expectations that the Federal Reserve will keep its stimulus intact well into 2014.

Gold traders have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Fed to reduce its bond purchases.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,345.60 a troy ounce during U.S. morning trade, down 0.5%.

Prices traded in range between USD1,340.30 a troy ounce, the daily low and a session high of USD1,360.20 a troy ounce.

The December contract rose to USD1,361.80 on Monday, the strongest level since September 20, before closing at USD1,352.20, little changed on the day.

Gold futures were likely to find support at USD1,310.10 a troy ounce, the low from October 22 and near-term resistance at USD1,366.50, the high from September 20.

Retail sales in the U.S. declined for the first time in six months in September, fuelling concerns over the U.S. economic recovery.

The U.S. Commerce Department said earlier that retail sales fell by a seasonally adjusted 0.1% in September, disappointing expectations for a 0.1% increase.

Core retail sales, which exclude automobile sales, edged up 0.4% last month, in line with expectations.

Core sales correspond most closely with the consumer spending component of the government's gross domestic product report. Consumer spending accounts for as much as 70% of U.S. economic growth.

A separate report from the Bureau of Labor Statistics showed that producer prices declined by a seasonally adjusted 0.1% in September, compared to expectations for a 0.2% increase.

The core producer price index eased up 0.1% in February, in line with expectations after holding flat in August.

Core prices are viewed by the Fed as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories.

The central bank is scheduled to start its two-day policy-meeting later Tuesday, with market analysts expecting the central bank to keep its USD85 billion-a-month asset purchase program on track.

Gold prices have largely tracked shifting expectations as to whether the Fed would start tapering its USD85-billion-a-month asset-purchase program by the end of the year.

Elsewhere on the Comex, silver for December delivery shed 0.5% to trade at USD22.43 a troy ounce, while copper for December delivery added 0.7% to trade at USD3.292 a pound.

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