Gold Prices Slip Ahead of Fed Policy Decision

Investing.com – Gold prices slipped on Wednesday morning trade in Asia ahead of a meeting of the U.S. Federal Reserve and as investors look for clues on future interest rate hikes this year.

for August delivery on the Comex division of the New York Mercantile Exchange were down $1.10 or 0.08%, to $1,298.30 a troy ounce by 1:15PM ET (05:15 GMT). 

Investors are now looking towards a two-day meeting of the Federal Open Market Committee (FOMC) that starts Wednesday for cues.

The Fed is widely expected to raise interest rates for the second time this year and markets are waiting to see if there will be a third and a fourth hike in 2018. 

Gold is highly sensitive to U.S. interest rates, which lift the opportunity cost of holding non-yielding bullion and boost the dollar, in which it is priced.

Meanwhile, the dollar stayed strong as the greenback continued along the upward trajectory that started Tuesday. The , designed to track the greenback against a basket of six major currencies, rose 0.06% to 93.

On Tuesday, demand for gold dropped and investors sought out the US dollar and riskier assets after an upbeat conclusion to a historic meeting between U.S. President Donald Trump and North Korean leader Kim Jong Un. The two leaders signed a document that said the U.S. President would provide “security guarantees” to Kim in exchange for the North Korean leader’s “unwavering commitment to complete denuclearization of the Korean peninsula.”

Dollar-denominated assets such as gold are sensitive to moves in the dollar – a gain in the dollar makes gold more expensive for holders of foreign currency and thus decreases demand for the precious metal. 

In other precious metal trade, shed 0.2% to $16.855 a troy ounce, lost 0.3% to $897.60 an ounce and lost 0.3% to $3.236.  

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.