Investing.com - Gold prices fell in Asia on Thursday and silver continued to drop sharply from overnight moves with attention focused on the upcoming European Central Bank policy review.
On the Comex division of the New York Mercantile Exchange, gold for August delivery eased 0.41% to $1,313.85 a troy ounce.
Silver futures for September delivery dropped 1.30% to $19.358 a troy ounce, while copper futures for September delivery inched up 0.04% to $2,247 a pound.
Overnight, gold fell as much as 1% in Wednesday's session, as the dollar hovered around four-month highs, ahead of a critical interest rate decision by the European Central Bank's Governing Council on Thursday afternoon in Frankfurt.
Gold extended overnight losses, as investors awaited the ECB's Governing Council's first monetary policy meeting since last month's historic U.K. referendum.
On Wednesday, economic indicators showed that consumer confidence in the European Union fell sharply by 1.8 in June to Minus-7.6, dropping to the lowest level since November, 2014. In the euro area, the DG ECFIN flash consumer confidence index declined by 0.7 from an upwardly revised Minus-7.2 to Minus-7.9. Analysts expected a reading of Minus-8.0. The Governing Council is widely expected to stand pat at Thursday's meeting, amid a relative lack of data following the U.K.'s decision to leave the EU on June 24.
The ECB meeting comes days before the Federal Open Market Committee (FOMC) will convene for its two-day July meeting in the middle of next week. Since the Fed left short-term interest rates unchanged at its June FOMC meeting, participants have been largely split on the timing of its next rate hike, amid strong employment and housing figures. The CME Group's (NASDAQ:NASDAQ:CME) Fed Watch tool now sees a 41.6% chance of a 25 point basis hike in December, up from around 20% last week.
Investors who are bullish on gold are in favor of a gradual tightening of monetary policy by the Fed. Gold, which is not attached to interest rates, struggles to compete with high-yield bearing assets in rising rate environments.
Elsewhere, the Dow Jones Industrial Average rose as much as 60 points on Wednesday to an intraday high of 18,622.01, hitting an all-time intra-session high. With several hours left in Wednesday's session, the Dow was on pace for its ninth consecutive win – its longest streak in three years. As foreign investors have piled into U.S. equities in broad risk-on trade, gold has lost some momentum over the last week.