Investing.com -- Gold inched down in cautious trade on Monday, amid a steady dollar, as market players looked ahead to the start of the Federal Reserve's two-day meeting in Washington D.C. for further clues on the path of the U.S. central bank's long-term interest rate outlook.
On the Comex division of the New York Mercantile Exchange, Gold for December delivery traded between $1,321.45 and $1,331.50 an ounce before settling at $1,327.05, down 4.45 or 0.33% on the session. Gold remained near three-week lows on Monday after closing last week's trade with its second consecutive losing week. More broadly, the precious metal is still up by nearly 25% year-to-date after hitting 28-month highs earlier in July.
Over the weekend, Gold rolled over from the August to December contract as the front month for future delivery.
Gold likely gained support at $1,253.70, the low from June 24 and was met with resistance at $1,368.60, the high from July 7.
Commodity traders largely stood pat on Monday, as metal investors prepared for the start of the Federal Open Market Committee's (FOMC) two-day July monetary policy meeting on Tuesday morning. While the FOMC is unlikely to make any adjustments to its benchmark Federal Funds Rate, the U.S. central could provide key hints on the timing of its next interest rate hike. After the Fed's historic rate hike last December, the Committee has responded by leaving the Fed Funds Rate steady at each of its first four meetings in 2016. When the Fed approved a 25 basis point rate hike at the end of last year, the FOMC abandoned a seven-year Zero Interest Rate Policy by ratifying their first interest rate hike in nearly a decade.
Since the FOMC last met in mid-June, a series of major economic and geopolitical developments could compel the Committee to alter its long-term rate forecast. In early-July, minutes from the meeting showed that the participants "generally thought it was prudent," to assess the implications of the Brexit vote on global financial markets before deciding on the timing of further monetary policy tightening. After global markets quickly stabilized following an initial panic, Fed governor Daniel Tarullo said at a forum in Washington that he felt the world's financial system prepared itself "reasonably well," to handle the fallout from the Brexit decision. Federal Reserve chair Janet Yellen has yet to issue a public comment on the impact of the U.K. referendum on the worldwide economy.
The FOMC will also convene for the first time since the release of a relatively optimistic June U.S. employment report, in which the labor market added 287,000 nonfarm payrolls last month. The robust job gains could erase some negative sentiments from a disappointing report in May when the economy added only 38,000 nonfarm jobs – its lowest monthly total in six years.
Any rate hikes by the FOMC this year are viewed as bearish for gold, which struggles to compete versus high-yield bearing assets in periods of rising rate environments.
Elsewhere, gold remained supportive as a safe-haven asset after leading G20 officials continued to express widespread concerns on the strength of the global economy at a conference in Chengdu, China over the weekend. Gold is still up by more than 5% since the U.K. voted to leave the European Union on June 24, even as global stock markets linger near nine-month highs.
"We reiterate our determination to use all policy tools – monetary, fiscal and structural – to achieve our goal of strong, sustainable, balanced and inclusive growth," the leaders said in a joint statement.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, was relatively flat on Monday hovering at 97.35 in U.S. afternoon trading. The index remains near four-month highs. Over the last few weeks, the dollar has risen sharply against the Japanese Yen and British Pound amid signs of potential easing from both the Bank of Japan and Bank of England in coming months.
Dollar-denominated commodities such as Gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for September delivery fell 0.021 or 0.11% to 19.668 an ounce.
Copper for September delivery lost 0.007 or 0.34% to 2.228 a pound.