Gold Futures Settle Lower For 3rd Straight Day

Gold prices drifted lower on Tuesday, pushing the most active gold futures contracts to a weak close for a third consecutive session, as the yields on long term bonds rose and the dollar gained against its peers.

Traders looked ahead to the Federal Reserve's monetary policy announcement due on Wednesday.

The dollar index, which rose to 90.68 around mid-morning from a low of 90.35 touched in the Asian session, pared gains and dropped down to 90.52 subsequently.

The yield on U.S. 10-year Treasury Note rose to 1.51%.

Gold futures for August ended lower by $9.50 or about 0.5% at $1,856.40 an ounce, the lowest close since May 14.

Silver futures for July ended down by $0.346 or 1.2% at $27.693 an ounce, while Copper futures for July settled at $4.3330 per pound, down $0.1940 or more than 4% from the previous close.

It is widely expected that the Fed won't make any changes to monetary policy but could signal that it is beginning to think about scaling back its asset purchases.

The Fed announcement on Wednesday is likely to acknowledge the recent increase in inflation, which was highlighted by today's Labor Department report showing record annual producer price growth.

The report said the producer price index for final demand advanced by 0.8% in May after climbing by 0.6% in April. Economists had expected another 0.6% increase.

Compared to the same month a year ago, producer prices in May were up by 6.6 percent, reflecting the largest increase since 12-month data were first calculated in November 2010.

The Commerce Department also released a report showing retail sales tumbled by more than expected in the month of May, falling by 1.3% following an upwardly revised 0.9% increase in April.

Economists had expected retail sales to slump by 0.8% compared to the unchanged reading originally reported for the previous month.

The Fed also released a report showing industrial production climbed 0.8% in May after inching up by a revised 0.1% in April.

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