The Labor Department reported overall consumer prices index fell a seasonally adjusted 0.1% in March, in line with expectation. The government also reported Tuesday that inflation at the wholesale level fell more sharply than had been anticipated last month amid weaker energy prices.

Gold for June delivery fell $1.40, or 0.2%, to $890.60 an ounce on the Comex division of the New York Mercantile Exchange. It had been modestly higher ahead of the update on consumer prices.

"The lower CPI print is certainly not friendly to gold," said Brian Kelly, chief executive officer of Kanundrum Research, a commodities and macroeconomic research firm. "Couple that with a stronger dollar and we have a significant headwind for the yellow metal."