Investing.com - Gold prices declined in North American trade on Wednesday, holding on to overnight losses, as market players awaited the release of minutes from the Federal Reserve’s July policy meeting.
Gold for December delivery on the Comex division of the New York Mercantile Exchange dipped $8.25, or 0.61%, to trade at $1,348.75 a troy ounce by 8:38AM ET (12:38GMT), after rising $9.40, or 0.7%, on Tuesday.
Investors will be focusing on minutes of the Fed’s most recent policy meeting due at 2:00PM ET (18:00GMT) for further clarity on the timing of the next U.S. rate hike. Ahead of the minutes Wednesday, St. Louis Fed President James Bullard speaks at 1:00PM ET (17:00GMT).
The Fed kept interest rates unchanged following its meeting on July 27 and said near-term risks to the U.S. economic outlook had diminished. However, the central bank stopped short of signaling a near-term rate rise.
Fed funds futures are currently pricing in a 15% chance of a rate hike by September. December odds were at around 53%, up from 42% a day earlier, according to Investing.com's Fed Rate Monitor Tool.
Gold is sensitive to moves in U.S. rates, which 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.
Speculation of a near-term U.S. rate hike mounted after New York Fed President William Dudley and Atlanta Fed chief Dennis Lockhart both said on Tuesday that interest rates could rise as soon as September.
The dollar rebounded from 7-week lows against the yen and euro on Wednesday as fresh hopes for a 2016 rate hike by the Federal Reserve lifted demand for the greenback.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.2% at 94.95, after falling to 94.37 in the prior session, the lowest since June 24.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
For the year, the precious metal is up nearly 26%, boosted by concerns over global growth and expectations of monetary stimulus.
Also on the Comex, silver futures for September delivery slumped 19.6 cents, or 0.99%, to trade at $19.67 a troy ounce during morning hours in New York, while copper futures lost 1.7 cents, or 0.78%, to $2.155 a pound.