WASHINGTON (dpa-AFX) - Gold prices dropped on Tuesday as the dollar climbed higher and bond yields moved up, ahead of the Federal Reserve's monetary policy announcement, due on Wednesday.
The U.S. central bank is expected to leave its benchmark interest rate unchanged, but the focus will be about what Fed officials say about lowering rates.
Recent hotter-than-expected consumer and producer price inflation readings have reduced optimism about the likelihood of the Fed's first-rate cut coming in June.
Fed Chair Jerome Powell and his colleagues will update their economic and rate projections on Wednesday for the first time since December.
The dollar index, which climbed to 104.06 in the European session, pared some gains later on, but still remained well above the flat line, gaining 0.4% at 103.85.
Gold futures for April ended down by $4.60 at $2,159.70 an ounce.
Silver futures for May ended lower by $0.130 at $25.135 an ounce, while Copper futures for May settled at $4.0745 per pound, down $0.0555 from the previous close.
The Reserve Bank of Australia today left interest rates at a 12-year high and signaled it may be done tightening monetary policy.
The Bank of Japan maintained a dovish stance, vowing to continue purchasing government bonds at a 'steady' pace amid persistent concerns over the economic recovery.
In U.S. economic news today, a report released by the Commerce Department showed a substantial rebound in new residential construction in the U.S. in the month of February.
The report said housing starts spiked by 10.7% to an annual rate of 1.521 million in February after plunging by 12.3% to a revised rate of 1.374 million in January. Economists had expected housing starts to surge by 7.1% to a rate of 1.425 million from the 1.331 million originally reported for the previous month.
The report also said building permits shot up by 1.9% to an annual rate of 1.518 million in February after dipping by 0.3% to a revised rate of 1.489 million in January. Building permits, an indicator of future housing demand, were expected to jump by 1.7% to a rate of 1.495 million from the 1.470 million originally reported for the previous month.
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