Investing.com - Gold prices held on to gains on Tuesday, after data showed that consumer price inflation in the U.S. rose in line with expectations in February, while prices excluding food and energy costs inched up modestly.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery tacked on $4.20, or 0.35%, to trade at $1,191.90 a troy ounce during U.S. morning hours. Prices hit an intraday peak of $1,194.50, the most since March 6.
Futures were likely to find support at $1,167.90, the low from March 20, and resistance at $1,200.00, the high from March 6.
The U.S. Department of Labor said that consumer prices increased 0.2% last month, meeting forecasts and following a drop of 0.7% in January. Year-over-year, consumer prices were flat in February, compared to expectations for decline of 0.1% and after falling 0.1% in January.
Consumer prices, excluding food and energy costs, rose 0.2% in February, above expectations for a 0.1% increase. Core consumer prices inched up 0.2% in January. Core CPI increased at annualized rate of 1.7% in February, up from 1.6% in January.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.5% to 96.71 early on Tuesday. The index is down nearly 4% since hitting a 12-year high of 100.78 on March 13.
The greenback remained under pressure amid uncertainty over the path of U.S. monetary policy after the Federal Reserve downgraded its forecasts for growth and inflation and lowered its interest rate projections last week.
Gold fell to a four-month low of $1,141.60 on March 17 amid concerns that the Fed will start raising rates as early as in June, before rallying more than 4% after the Fed projected a slower pace of rate hikes.
A delay in raising interest rates would be seen as bullish for gold, as it decreases the relative cost of holding on to the metal, which doesn't offer investors any similar guaranteed payout.
Meanwhile, silver futures for May delivery advanced 8.7 cents, or 0.52%, to trade at $16.97 a troy ounce. On Monday, silver rallied to $17.09, the strongest level since February 17.
Elsewhere on the Comex, copper for May delivery inched up 0.8 cents, or 0.29%, to trade at $2.798 a pound as worse-than-expected Chinese manufacturing data fueled hopes of more stimulus.
The preliminary reading of China’s HSBC (LONDON:HSBA) manufacturing index released earlier dropped to an 11-month low of 49.2 in March, below the 50-point level that separates growth in activity from contraction.
Analysts had expected a reading of 50.6, down slightly from February's reading of 50.7.
The disappointing data fuelled speculation policymakers in Beijing will have to introduce further stimulus measures to boost growth and spur economic activity in the world's second largest economy.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.