COMEX gold retreated from a one-month high early Tuesday after surprisingly tame US inflation data and a strong housing starts number shored up confidence in the dollar, even as they further undermined the case for aggressive interest rates increases by the Federal Reserve.
The dollar dipped then rallied back after the numbers. The initial focus was a 0.1 percent drop in the Labour Departments July consumer price index, which undermined the argument for holding gold as a store of value by muting talk of "stagflation," slow economic growth with rising inflation. December gold at 9:22 am EDT (1322 GMT), was down $2.40 at $402.80, trading from $406 to $402.60. On Monday, the contract reached a one-month high at $406.40.
Groundbreaking on new homes grew at its fastest pace in two years last month, showing the housing sector is still an impetus for the economy. Later data further supported the dollar, showing industrial production rose 0.4 percent in July, just a tad under the 0.5 percent increase expected.
Support was expected in December gold around $402, and around $400 in spot gold, according to the bullion dealer.
Spot gold was at $401.00/1.50, down from the close at $402.50/3.00. The morning fix in London was $401.45.
September silver was down 3.7 cents at $6.70 an ounce in a $6.785-$6.66 trading range. Spot silver fetched $6.67/70, down from $6.69/72. The fix was at $6.71.
NYMEX October platinum retreated $8.20 to $875 an ounce, after hitting a near 17-month high Monday. Spot platinum fetched $871.00/877.00. September palladium was off $1 at $216 an ounce. Spot palladium was quoted at $214.00/218.00.