Gold prices fall on weaker than expected China producer prices

Investing.com - Gold prices fell in Asia on Tuesday after data from China showed a sharper than expected drop in producer pries, though consumer prices were stronger than expected.

Producer prices year-on-year for February fell 4.8%, more than the 4.3% decline expected. But consumer prices year-on-year for the same month rose 1.4%, faster than the 0.9% gain expected.

On the Comex division of the New York Mercantile Exchange, gold for April delivery fell 0.23% to $1,163.70 a troy ounce.

Silver futures, meanwhile, for May delivery also fell 0.39% to trade at 15.715 a troy ounce.

Copper delivery for May eased 0.20% to $2.661 a pound. Copper is still down more than 5% on the year.

Overnight, gold prices rebounded on Monday, after falling sharply at last week's close to its lowest level in three months.

On Friday, gold futures plunged more than $32 an ounce after better than expected U.S. economic data exacerbated fears that the Federal Reserve could raise interest rates in June.

Higher interest rates are a troubling sign for gold, which struggles to compete with yield-bearing investment strategies when the Federal Reserve tightens monetary policy. The yield on 10-year U.S. Treasuries fell by more than 1.25% on Monday to 2.209, after increasing by nearly 7% on Friday. Yields for the year are still up by more than 12%.

In Europe, the European Central Bank started its highly-anticipated, EUR 60 billion quantitative easing program by reportedly making bond purchases on the German, Italian, French and Belgian markets.

Yields on 10-year German bunds plunged more than 20% in late European trading to 0.31. Gold, which doesn't pay its investors anything, is widely viewed as an alternative for yield-bearing assets.

Elsewhere in Europe, Greece foreign minister Yanis Varoufakis told Italian newspaper that the financially-strapped nation could hold a referendum to decide whether the euro zone's terms for its bailout program are acceptable.

Varoufakis made the comments ahead of Monday's meeting of euro zone finance ministers, where Greece's reform measures for the package were expected to be discussed.