Investing.com - Gold and silver came under heavy selling pressure on Tuesday, as the U.S. dollar strengthened after official data showed that the U.S. trade deficit narrowed to a four-year low in November.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.35% to trade at 81.10, the highest since November 22.
A stronger U.S. dollar usually weighs on precious metals as it dampens their appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,225.90 a troy ounce during U.S. morning trade, down 1%. Gold prices fell by as much as 1.1% earlier in the day to hit a session low of USD1,225.50 a troy ounce.
The February contract climbed to USD1,247.70 a troy ounce on Monday, the highest since December 16, before trimming gains to settle at USD1,238.00, down 0.05%. Futures were likely to find support at USD1,212.60 a troy ounce, the low from January 6 and resistance at USD1,247.70, the previous day's high.
Meanwhile, silver for March delivery plunged 1.95% to trade at USD19.70 a troy ounce. The March contract ended Monday's session 0.53% lower at USD20.10 a troy ounce.
The Commerce Department said in a report earlier that the U.S. trade deficit narrowed to a four-year low of USD34.25 billion in November from a deficit of USD39.33 billion in October, as exports to China rose to an all-time high.
The robust trade data underlined speculation that the economy will be strong enough to allow the Federal Reserve to continue withdrawing support through 2014.
Investors were turning their attention to Wednesday's minutes of the Federal Reserve's December meeting and Friday's U.S. jobs report for December for further indications on the possible timing of reductions in Fed stimulus.
The U.S. central bank will reduce its bond-buying program by USD10 billion a month starting in January. Some market participants believe the Fed will likely taper its bond purchases by USD10 billion in each of its next seven meetings before ending the program in December 2014, amid indications of an improving U.S. economy.
Elsewhere on the Comex, copper futures for March delivery dipped 0.3% to trade at USD3.350 a pound. Prices of the industrial metal tumbled to USD3.330 a pound on Monday, the lowest since December 24.
Investing.com offers an extensive set of professional tools for the financial markets.
Read more News on Investing.com and download the new Investing.com Stocks & Finance App for Android!
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.