The price of gold dived near its three-month low Tuesday morning with the US dollar trading firm versus a basket of currencies amid hopes for a debt deal in the world's largest economy.
Gold for December delivery, the most actively traded contract, lost $21.40 to $1,255.20 an ounce. Yesterday, gold snapped its four-day losing streak to end higher with investors seeking the precious metal's safe haven status even as no solution to the U.S. budget and debt ceiling appears to be in sight. Gold also found support with the dollar trading lower against a basket of major currencies and on inflation climbing in China and India, two of the world's largest consumers of gold.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, moved down to 889.13 tons from 890.98 tons.
Meanwhile, the U.S. dollar moved back near its one-month high versus the euro, sterling, the Swiss franc and the yen.
In economic news from the euro zone, German economic sentiment climbed to its highest level in more than three years in October, a survey by the Center For European Economic Research or ZEW revealed. The ZEW indicator of economic sentiment increased to 52.8 in October from 49.6 in September. The index reading was the highest since April 2010. Economists had forecast the index to remain the same as in September.
Meanwhile, U.K. inflation remained unchanged at 2.7 percent in September, the report released by the Office for National Statistics showed. Inflation continues to hover above the central bank's 2 percent target. Economists had forecast the annual rate to drop to 2.6 percent.
Elsewhere, the prices of silver and platinum were moving lower in morning deals.
From the U.S., the New York Federal Reserve is scheduled to release the results of its manufacturing survey for October at 8:30 am ET. Economists expect the index to improve to 7 from 6.29 in September.
