The dollar edged lower against a basket of currencies, but was underpinned by the strong inflation figures.
A strong dollar makes commodities priced in the U.S. unit more expensive for holders of other currencies.
Gold hit a three-week high of $1,284.85 on Monday due to market volatility sparked by violence in Iraq, but prices have dropped since then. Gold is up 1.6 percent so far in June.
Reflecting bearish investor sentiment towards bullion, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.26 ton to 782.62 tons on Tuesday, a second straight day of declines.
The fund, considered a proxy for investor sentiment, posted its biggest outflow since mid-April on Monday.
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Physical markets in Asia also remained weak.
In top buyer China, gold prices traded either at a discount of about $1 an ounce or on a par with the global benchmark, in a sign that buying interest was weak.
Gold premiums in India—the world's No. 2 gold buyer—fell to their lowest in four months as wedding demand cooled off.
—By Reuters. For more information on precious metals, please click here.