Prices of gold futures extended gains overnight trade on Tuesday as the dollar slid on lower expectations of a rise in interest rates from the Federal Reserve of the United States this year because of the disappointing inflation data from United States weighing on the dollar.
Gold for December delivery on the Comex Exchange was up $7.45, or 0.55%, to trade at $1,355.00 a troy ounce.
Spot gold was up about 0.6 per cent at $1,346.31 an ounce.
The US Commerce Department said consumer prices remained flat in July from the previous month, compared with expectations for a 0.1% increase. CPI excluding food and energy components, rose 0.1%. In the 12 months to July, core CPI increased 2.2%.
Simultaneously, the Commerce Department said housing starts rose 2.1% last month to an annual rate of 1.21 million, while construction permits fell 0.1% to 1.15 million .
The disappointing report led investors to push back expectations for the next rise in US .. futures federal funds set prices in only 9% chance of a rate hike in September types. December probabilities were at around 42%.
The dollar was put defensively after weaker than expected data in the United States on Friday dented prospects for a short-term rate hike by the Fed.
Dollar Index fell 0.2 percent to $ 95.41 versus a basket of currencies. A stronger US dollar discourages buying gold by making the metal more expensive in other currencies.
At the Multi Commodity Exchange, gold for delivery in August month rose by Rs 146, or 0.47 per cent to Rs 31,365 per ten grams in futures market today as traders enlarged positions.
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