By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) -- Gold futures fell for a second day on Tuesday, retreating from near a one-month high, as the U.S. dollar gained on weak economic data and reduced the appeal of the precious metal as an alternative investment.
Gold for April delivery declined $9.60 to $1,103.80 an ounce.
The dollar climbed higher, keeping gold lower, after the U.S. Conference Board said its index on consumer confidence dropped much more than expected this month. See story on consumer confidence.
The dollar index (DXY 80.80, +0.29, +0.36%) , which measures the U.S. unit against a trade-weighted basket of six major currencies, traded at 80.696, up from 80.513 in late North American trading Monday. Read more on currencies.
The precious metal also showed little reaction to the S&P/Case-Shiller home-price index, which showed prices in U.S. cities fell 0.2% in December. See more on home prices.
A business-sentiment survey in Germany and comments from a Bank of England official also damped speculation that economic recovery would fuel inflation, which would also make gold a more attractive investment. See more on German survey.
Low inflation "should have an adverse impact on the gold price, as gold loses its appeal as a hedging instrument against inflation risks," analysts at Commerzbank wrote in a note. "We continue to expect the gold price to move sideways within the trading range of between $1,050 and $1,150 an ounce that has been in place since mid-December."
The SPDR Gold Trust ETF (GLD 108.07, -1.00, -0.92%) , the biggest exchange-traded fund backed by the metal, fell 0.9%.
