Investing.com - Gold futures were lower in European trade on Tuesday, after posting modest overnight gains, as market players looked ahead to minutes of the Federal Reserve’s April policy meeting, which many feared could be more hawkish than the statement.
Gold for June delivery on the Comex division of the New York Mercantile Exchange dipped $2.00, or 0.16%, to trade at 1,274.80 a troy ounce by 06:46GMT, or 02:46AM ET.
Investors will be focusing on minutes of the Federal Reserve’s April policy meeting due on Wednesday at 18:00GMT, or 2:00PM ET, for some clarity on where the U.S. central bank stands on its path toward rate hikes.
The Fed left interest rates unchanged following its meeting on April 27 and issued a statement implying it was in no hurry to raise rates, saying it wants to have more confidence in the economy's overall health before hiking rates again.
The U.S. central bank has previously projected it plans to raise interest rates two more times before the end of the year, while market players expect just one more hike, most likely in December.
A day earlier, gold tacked on $2.70, or 0.21%, but investors remained cautious after strong U.S. inflation data and comments from Federal Reserve officials rekindled prospects of the central bank raising rates later this year.
Prices of the yellow metal are up nearly 19% so far this year amid indications the Fed will take a slow and cautious approach to raising interest rates this year.
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. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
Elsewhere on the Comex, silver futures for July delivery shed 13.0 cents, or 0.75%, to trade at $17.12 a troy ounce during morning hours in London, while copper futures declined 2.1 cents, or 1.01%, to $2.068 a pound.
The U.S. dollar index, which tracks the greenback against a basket of six rivals, rose 0.2% to 94.77, nearing a three-week high of 94.84 hit on Friday.
A stronger dollar reduces demand for raw materials as an alternative investment and makes dollar-priced commodities more expensive for holders of other currencies.