Investing.com - Gold held steady to weaker in Asia on Wednesday as investors awaited the July minutes from the Federal Reserve for what nay prove to be the clearest signal on the timing of a widely expected rate hike this year.
On the Comex division of the New York Mercantile Exchange, gold for December delivery fell 0.02% to $1,116.70 a troy ounce.
Silver for September delivery rose 0.30 to $14.835 a troy ounce. Copper for September delivery eased 0.05% to 2.283 a pound.
Overnight, 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.
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: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.