Investing.com - Gold prices remained higher on Wednesday, after data showed that consumer price inflation in the U.S. rose less than expected in July, while prices excluding food and energy costs inched up modestly.
Gold futures for December delivery on the Comex division of the New York Mercantile Exchange tacked on $3.70, or 0.33%, to trade at $1,120.60 a troy ounce during U.S. morning hours, not far from a one-month high of $1,126.30 hit on August 13.
The U.S. Commerce Department said that consumer prices increased by 0.1% last month, below forecasts for a gain of 0.2% and following a rise of 0.3% in June.
Consumer prices, excluding food and energy costs, rose 0.1%, missing expectations for a 0.2% increase. Core CPI increased at annualized rate of 1.8% last month, matching expectations and unchanged from 1.8% in June.
The softer-than-forecast inflation data fanned hopes that the Federal Reserve could delay raising interest rates until the very end of 2015 instead of moving as early as next month.
Investors now turned their attention to the release of minutes from the Federal Reserve's latest policy meeting at 2:00PM ET for further hints on the timing of a U.S. rate hike.
Some traders believe the U.S. central bank could postpone raising interest rates next month, despite a recent batch of upbeat economic data, as officials are likely to remain concerned over global growth and inflation pressures due to China’s shock currency devaluation move and weak commodity prices.
Gold fell to a five-and-a-half year low of $1,072.30 on July 24 amid speculation the Fed will raise interest rates in September for the first time since 2006. But prices have since rebounded approximately 4.5% on hopes of a delayed U.S. rate hike.
Elsewhere in metals trading, copper for September delivery on the Comex division of the New York Mercantile Exchange shed 1.2 cents, or 0.52%, to trade at $2.275 a pound during morning hours in New York.
A day earlier, copper plunged to $2.265, a level not seen since July 2009, before ending at $2.287, down 3.4 cents, or 1.46%, as steep declines on Chinese stock markets dampened appetite for the red metal.
The Shanghai Composite took investors on another roller-coaster ride on Wednesday, tumbling by as much as 5% after the open, before paring losses after the midday break to end up 1.3% as Beijing’s massive stock-rescue operation kicked into gear.
Chinese stock markets slumped 6% a day earlier amid growing concerns over the health of the Asian nation's economy and worries that policymakers may allow the yuan to continue to depreciate, fueling fears over a currency war that could destabilize the global economy.
Market players are also concerned that the plunge in the stock market could spread to other parts of the Chinese economy, triggering fears that the Asian nation's demand for the industrial metal will decline.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.