- Gold prices eased slightly in Asia on Wednesday in mild profit taking with the focus on the upcoming Federal Reserve announcement.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at $1,271.50 a troy ounce, down 0.04%, after hitting an overnight session low of $1,259.00 and off a high of $1,273.50.

Overnight, the U.S. Labor Department reported that the U.S. consumer price index rose 2.1% on year in May and rose 0.4% from April. It was the fastest increase in annual inflation since October 2008, which sparked demand for the greenback.

Market expectations had been for an annual increase of 2.0% and a monthly rise of 0.2%.

Firming inflation rates should prompt the Federal Reserve to continue winding down its monthly bond-buying program and later raise benchmark interest rates from current record lows as the economy gains steam.

The Fed will conclude a two-day policy meeting on Wednesday, and the U.S. central bank is seen scaling back its asset-purchasing program by another $10 billion, though hikes to benchmark interest rates won''t come until sometime in 2015.

Fed asset purchases aim to spur recovery by suppressing long-term interest rates, weakening the dollar as a side effect, which boosts gold''s appeal as a hedge.

A separate report showed that both U.S. housing starts and building permits fell in May, pointing to underlying weakness in the housing sector.

The Commerce Department reported that housing starts dropped by 6.5% last month to 1.001 million units, while the number of building permits issued last month fell by 6.4% to 991,000 units, though markets focused on inflation data instead.

Silver for July delivery rose 0.03% at $19.737 a troy ounce. Copper futures for July delivery gained 0.04% at $3.061 a pound.

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