MW: Gold retreats from record high as dollar rebounds
NEW YORK (MarketWatch) -- Gold futures retreated from their record highs Tuesday, as the U.S. dollar rebounded after data showed a big decline in a key U.S. price index, reducing the metal's appeal as a hedge against a weaker currency and higher inflation.
The core producer price index, which excludes volatile food and energy goods, fell last month by 0.6%, the biggest decline in three years, the Labor Department reported. Meanwhile, the International Monetary Fund said late Monday that it has sold 2 metric tons of gold to Mauritius.
On the Comex division of the New York Mercantile Exchange, the most actively traded December contract slid $6.30, or 0.6%, to $1,132.90 an ounce. It climbed above $1,144 on Monday.
The thinly traded November contract also fell, down $7.30, or 0.6%, to $1,131.30 an ounce. It ended Monday's trading at $1,138.60, the highest settlement for a Comex front-month contract.
Gold futures have soared nearly 30% this year.
A rebounding dollar has pressured gold prices as "predominantly short-term investors are driving the current gold price rally," said Carsten Fritsch, an analyst at Commerzbank, in a note. The purchase by Mauritius had "at least a psychological impact."
The IMF's new announced sale followed India's purchase earlier this month of 200 tons of IMF gold. The IMF has earmarked 403.3 metric tons of gold to sell.
In economic news, the Labor Department also reported that the PPI index, including food and energy goods, rose a seasonally adjusted 0.3%. The PPI has fallen 1.9% in the past year, while the core PPI has risen 0.7%.
The output of the nation's factories, mines and utilities rose 0.1% in October, the Federal Reserve said Wednesday.
In currencies trading, the dollar rose against most of its major rivals, including the euro and the Japanese yen. A stronger dollar tends to push down dollar-denominated commodities prices.
Holdings in SPDR Gold Shares (GLD 111.15, -0.48, -0.43%) , the biggest gold exchange-traded fund, stood at 1,113.83 metric tons as of Monday, unchanged from a day ago.
In other metals, December silver lost 0.8% to $18.255 an ounce, December palladium lost 1.9% to $368.90 an ounce, and January platinum slid 0.4% to $1,439.50 an ounce.
