Gold settled lower on Tuesday on buoyant global equities and as the dollar strengthened after upbeat U.S. data, while the market continued to monitor international political tensions.
Palladium fell from a 13-year high of $900 an ounce hit in the previous session, supported by worries about supplies from top producer Russia and strong demand prospects. Prices were last down 1.1 percent at $878 an ounce.
"It is mostly the demand side, with record-high car sales from China, while supply comes from South Africa and Russia, where there are continued disruptions... this makes it the perfect candidate for funds to step in," Saxo Bank senio manager Ole Hansen said.
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settled $2.60 lower at $1,296.70 an ounce, while spot gold eased 0.2 percent to $1,295 an ounce, after dropping 0.6 percent in the previous session.
Chart: Precious Metals
"Gold obviously didn't like the U.S. CPI and housing data, which boosted the dollar," Hansen said.
The dollar extended earlier gains against a basket of main currencies after data showed U.S. housing starts rebounded strongly in July after two straight months of declines. Separately, U.S. consumer prices barely rose during the same month.
The market was awaiting the annual meeting of central bankers in Jackson Hole, Wyoming, on Thursday, which includes a speech on Friday from Federal Reserve chief Janet Yellen that could give clues on the timing of any rate rise.
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The U.S. central bank is expected to raise rates in the middle of next year, depending on the strength of the economy. Higher interest rates would encourage investors to withdraw money from non-interest-bearing assets such as gold.
"Traders will be watching eagerly later in the week at the FOMC minutes and Jackson Hole address to gauge any clues to the timing of a Fed rate hike," MKS said in a note.
Gold was also pressured by a return in risk appetite that saw equity markets rise on easing international political tensions.
—By Reuters