Investing.com -- Gold futures inched down amid a stronger dollar, as investors await the release of the minutes from the Federal Open Market Committee's July meeting on Wednesday for further indications on the timing of the U.S. central bank's first interest rate hike in nearly a decade.
On the Comex division of the New York Mercantile Exchange, gold for December delivery traded in a broad range between $1,108.80 and $1,120.50 a troy ounce before closing at $1,115.50, down 2.90 or 0.26%. Previously, gold had closed higher in seven of its 10 last sessions edging forward after touching down to 10-year lows in late July. Gold remains down approximately 1.5% over the last month of trading.
Gold likely gained support at $1,082.00, the low on August 5 and was met with resistance at $1,126.30, the high from Aug. 13.
Traders appeared hesitant to make any drastic moves on Tuesday ahead of the Federal Reserve's release of the minutes from its July meeting on Wednesday afternoon. While Fed chair Janet Yellen has indicated that the FOMC could lift interest rates at some point in 2015 if the economy and labor markets continue to show improvement, the Fed has been tight-lipped as to whether lift-off will occur in September.
Hours before the Fed minutes are made public on Wednesday afternoon, the U.S. Labor Department's Bureau of Labor Statistics will issue its Consumer Price Index (CPI) report for July. Last week, Fed vice chairman Stanley Fischer expressed concern with the lack of inflation in the U.S. economy due to slower than expected growth. The Fed would like to see long-term inflation move toward its targeted goal of 2% before it starts to raise interest rates.
For the July report, consensus forecasts expect the CPI to tick up 0.2% after solid monthly gains of 0.3% and 0.4% in June and May respectively. During its last monthly report, the CPI moved steadily upward in spite of record monthly declines in hospital services by 1.1%. The headline CPI also received a boost in June from a rise in energy prices, which increased by 1.7% for the month.
Energy prices, however, since late-June have crashed approximately 25% amid record oversupply on the global markets. The massive decline in crude prices has caused economists to temper their expectations for further gains in inflation. BNP Paribas (PARIS:BNPP), for instance, has lowered its inflation forecast for January, 2016 to around 1.75% from above 2% in mid-June.
Economists will still keep a close eye on Core CPI, which strips out food and energy prices, for indications on whether the Fed could institute a rate hike at its next FOMC meeting, beginning on September 17. Analysts have forecasted modest increases in the Core CPI for July, by a consensus of 0.2% on a monthly basis.
Gold, which is not attached to dividends or interest rates, struggles to compete with high-yield bearing assets in periods of rising rates.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rose more than 0.15% to an intraday high of 97.09 before falling back to 97.00 in U.S. afternoon trading. The dollar moved slightly higher after the U.S. Commerce Department said U.S. housing starts rose to a near eight-year high, while building permits fell sharply in July.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for September delivery plunged 0.488 or 3.19% to 14.810 an ounce.
Copper for September delivery fell 0.035 or 1.50% to 2.286 a pound.