WASHINGTON (dpa-AFX) - Gold futures have shown a strong move to the upside during trading on Tuesday, partly offsetting the nosedive seen in the previous session.
After plunging $1.08 or 2.6 percent to $4,005.70 an ounce on Monday, gold for August delivery has jumped $59.70 or 1.5 percent to $4,065.40 an ounce.
The rebound by gold prices came following the release of a closely watched Labor Department report showing consumer prices in the U.S. decreased by much more than expected in the month of June.
The Labor Department said its consumer price index fell by 0.4 percent in June after climbing by 0.5 percent in May. Economists had expected consumer prices to edge down by 0.1 percent.
The report also said the annual rate of consumer price growth slowed to 3.5 percent in June from 4.2 percent in May, coming in below economist estimates for a 3.8 percent jump.
Meanwhile, the Labor Department said core consumer prices, which exclude food and energy prices, came in unchanged in June after rising by 0.2 percent in May. Economists had expected core prices to increase by another 0.2 percent.
The annual rate of growth by core consumer prices slowed to 2.6 percent in June from 2.9 percent in May, while economists had expected the pace of growth to slip to 2.8 percent.
The weaker-than-expected inflation data has helped ease recent concerns about the outlook for inflation and the possibility of higher interest rates.
'Today's better than expected core reading gives the Fed breathing room in deciding whether and when to raise interest rates,' said Nationwide Chief Economist Kathy Bostjancic.
She added, 'That all said, the renewed escalation of conflict in the Middle East and announced reimposition of a U.S. blockage has prompted a sharp reversal in oil and gasoline prices that introduces upside risk to our forecast.'
The increase by the price of gold also comes amid a decrease in the value of the U.S. dollar, with the U.S. dollar index well off its lows but still down by 0.3 percent.
Buying interest has remained somewhat subdued, however, with a continued increase by the price of crude oil limiting the upside for gold.
U.S. crude oil futures have given back ground after an early surge but remain up by more than 1 percent amid the ongoing conflict between the U.S. and Iran.
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