Gold Slides as Data Hurt Dollar

Trading in the greenback was mixed while the precious metal fell.
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Gold prices were easing Tuesday, while trading in the dollar was mixed.

Benchmark bullion futures were losing $1 at $885.30 an ounce in recent action on the Comex division of the New York Mercantile Exchange.

One euro was buying $1.55 vs. $1.5486 Monday. The British pound was selling for $1.9516 vs. $1.9632 in the last session. The dollar was steady against the Japanese yen, trading for around 108 yen, the same as previously.

Weakness in the dollar against the euro was prompted by unexpectedly strong producer price inflation data and weak reports on housing and manufacturing.

"This supports RBC's base case that when all the dust from the credit crisis and stimulus settles, the Fed will return to easing to support its full employment mandate," writes T.J. Marta, a fixed income strategist at RBC Capital Markets in New York.

An easing of monetary policy by the

Federal Reserve

would mean lower short-term interest rates and would thus make the U.S. dollar less attractive to hold than other currencies, such as the euro.

Gold Isn't Totally Safe

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The

CurrencyShares Euro Trust

(FXE) - Get Report

was rising 0.2%. The

CurrencyShares British Pound Sterling

(FXB) - Get Report

was lower by about 0.6%. The

CurrencyShares Japanese Yen Trust

(FXY) - Get Report

was steady, barely changed.

The

SPDR Gold Trust

(GLD) - Get Report

, which holds solid gold bars, was gaining 0.2%.

In the mining patch,

Randgold Resources

(GOLD) - Get Report

was rallying about 3%, while

Goldcorp

(GG)

was up 2.3%.