Investing.com - Gold prices fell in early Asia on Tuesday with sentiment downbeat on prospects for a rate hike by the Federal Reserve this summer seen growing.
Gold for June delivery on the Comex division of the New York Mercantile Exchange eased 0.38% to $$1,212.05 a troy ounce.
Silver futures for July delivery dropped 1.35% to $16.050 a troy ounce, while copper futures rose 0.19% to $2.099 a pound.
Copper traders will be looking out for a pair of reports on China's manufacturing sector this week, amid ongoing concerns over the health of the world's second biggest economy.
The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.
Overnight, gold futures trimmed overnight losses in North American trade on Monday, after dropping below the key $1,200-level for the first time since February as investors continued to factor in an increased chance of a near-term U.S. interest rate rise.
Expectations for a summer rate hike mounted after Federal Reserve Chair Janet Yellen said late Friday that a rate increase would be appropriate in coming months if the economy continues to strengthen.
St. Louis Fed President James Bullard was the latest policymaker to suggest that a rate hike in June or July is a real possibility. Speaking in Seoul earlier, Bullard said global markets appear to be "well-prepared" for a summer interest rate hike.
Traders are now pricing in a 28% chance for a rate hike in June and 60% in July, according to CME Group's (NASDAQ:NASDAQ:CME) FedWatch tool. September odds were at about 68%.
Gold futures are down nearly 7% so far in May as hawkish comments from Fed officials as well as minutes of the Fed's April meeting have convinced many analysts and investors that a rate hike in June or July is a real possibility.
Gold is sensitive to moves in U.S. rates, as a rise would lift the opportunity cost of holding non-yielding assets such as bullion.
In the week ahead, investors will be focusing on Friday’s U.S. nonfarm payrolls report for May to gauge if the world's largest economy is strong enough to withstand further rate hikes in 2016.
There is also ISM manufacturing data on Wednesday and ISM services on Friday as traders search for more clues on the timing of the next U.S. rate hike.