Investing.com - Gold gained in Asia on Thursday as investors saw after the U.S. Federal Reserve May meeting minutes overnight as dovish in tone on the timing of the next rate hike.
Gold for June delivery on the Comex division of the New York Mercantile Exchange rose 0.50% to $1,259.38 a troy ounce. Copper futures on the Comex dipped 0.19% to $2.584.
Overnight, gold futures were steady as investors parsed the Fed minutes for possible changes in the outlook concerning the path of U.S. interest rate hikes, after the recent batch of economic data showed a slowdown in U.S. economic activity in the first quarter.
U.S. economic growth, measured by Gross Domestic Product (GDP), rose by annualized rate of just 0.7% for the first three months of 2017. It was the slowest period of first-quarter economic growth since 2014.
In a statement immediately following the release of its decision to keep its benchmark rate unchanged in May, the Federal Reserve reiterated that monetary policy remained accommodative to support both an uptick in labor market conditions and a sustained return to 2% inflation.
Although, the US labor market continued to show signs of strength, as unemployment dropped to 4.4% the lowest level since 2007, the rate of inflation slowed to 2.2% in April from a peak of 2.7% achieved in February.
According to investing.com’s Fed rate monitor tool, nearly 80% of traders expect the Fed to hike interest rates in June.
Rising expectations of a June rate hike prompted a recovery in both the dollar and US treasury yields, but gold futures have been supported by political turmoil in Washington, as investors’ started to question President's Trump ability to deliver on his pro-growth economic agenda.
Gold is sensitive to both moves higher in bond yields and the U.S. dollar – A stronger dollar makes gold more expensive for holders of foreign currency while a rise in U.S. rates, lift the opportunity cost of holding non-yielding assets such as bullion.