Investing.com -- Gold inched up on Tuesday remaining near one-month lows, as policymakers from the Federal Reserve received a final opportunity to digest a mixed batch of economic data ahead of a closely-watched interest rate decision in the middle of the week.
On the Comex division of the New York Mercantile Exchange, Gold for December delivery traded between $1,321.30 and $1,331.95 an ounce before settling at $1,328.00, up 0.80 or 0.06% on the session. Despite the modest gains, Gold has trended downward in recent sessions sliding more than 2% over the last three weeks since hitting a 28-month high in early-July. Nevertheless, the precious metal is up by 25% year to date and is on pace for one of its strongest years in a decade.
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.
For a second consecutive session, gold traded in a tight range as cautious investors awaited the Fed's decision on Wednesday afternoon after the close of trading. The Federal Open Market Committee (FOMC) is widely expected to leave its benchmark interest rate at a targeted range between 0.25 and 0.50% for their fifth straight meeting. On Tuesday, the CME Group's (NASDAQ:CME) Fed Watch tool placed the probability of a July rate hike at 2.4%.
Even if the FOMC holds rates steady, analysts will closely parse the monetary policy statement for signals on whether the Committee is leaning towards further tightening when it meets again in late-September. The odds of a September rate hike, according to the CME Group, rose to 25.2% on Tuesday, up from 18.8% a day earlier. By December, the odds rise substantially to 41.7%, in line with previous estimates over the last week.
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.
While the Conference Board's Consumer Confidence Index fell slightly in July to 97.3, consumer confidence still remains highly following a massive five-point surge a month earlier. Analysts expected a decline of two points to 96.0. The present situation index also rose 1.7 points to 118.3, representing its strongest monthly gain since last September.
Also, new home sales last month rose by 592,000, topping consensus forecasts of 562,000 and marking the largest increase in three months. On an annual basis, new home purchases in the Midwest and South are both up by more than 20% over the last 12 months. Economists are less optimistic about growth potential in the service-sector after Markit's PMI Services Flash fell 0.4 points from a prior reading of 51.3. Any reading below 50.0 provides signals of contraction in the industry.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, was relatively flat on Tuesday hovering at 97.16 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. Following the Fed's decision, the BOJ will hold its latest monetary policy meeting on Friday.
Dollar-denominated commodities such as Gold become more expensive for foreign purchasers when the dollar appreciates.
Gold responded somewhat after falling slightly in the overnight, Asian session. On Monday, the International Monetary Fund announced that its board has adopted a new method for calculating global reserve currencies, roughly two months before the yuan is set to join the IMF's Special Drawing Rights basket for the first time ever.
China is the world's largest producer of gold and the second-largest consumer of the precious metal behind India.
Silver for September delivery gained 0.033 or 0.17% to 19.680 an ounce.
Copper for September delivery added 0.007 or 0.32% to 2.224 a pound.