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NEW YORK - Gold futures closed lower in New York on Wednesday after the Labor Department reported that U.S. consumer costs rose less than expected in April, lowering the demand for the metal as a hedge against inflation.

Gold for June delivery fell $3.10 to close at $866.50 an ounce on the New York Mercantile Exchange. The contract hit an intraday low of $864 an ounce.

The consumer-price index rose 3.9 percent in the 12 months ended April 30 with decelerating energy prices offsetting rising food prices, the Labor Department said today. Excluding volatile food and energy prices, the core consumer price index increased 0.1 percent.

Gold has dropped $19.30, or 2.2 percent, since the end of last week.

In currency trading, the dollar pared some of its gains after the CPI data. However, the dollar was boosted by growing speculation in the market that the Federal Reserve is set to begin focusing more on inflation threats than economic growth.

The dollar index was last up 0.2 percent to 73.40. The dollar gained for the second straight day against a weighted basket of six major currencies.

Dollar strength typically pressures dollar-denominated commodities, such as gold and crude oil, as it makes them more expensive for holders of other currencies.

June crude oil was down $1.27 at $124.53 a barrel as gold closed and earlier traded even lower at $123.77. Oil declined following a U.S. government report that showed crude supplies rose less than expected as refinery utilization climbed.

Also on the Nymex, July silver fell by 22 cents to end at $16.61 an ounce. Before today, the price advanced 13 percent this year.

July platinum fell $34.30 to $2,039.10 an ounce, while June palladium declined $3.15 to $437.70 an ounce.