Investing.com - Gold futures were lower in European trade on Tuesday, after climbing to a four-week high in the prior session, as investors readjusted positions ahead of the Federal Reserve's two-day monetary policy meeting due to begin later in the day.
While the Fed is widely expected to leave interest rates unchanged at the conclusion of its policy meeting at 18:00GMT, or 2:00PM ET, Wednesday, the U.S. central bank could provide guidance on its pace of tightening over the next several months.
Fed Chair Janet Yellen is to hold what will be a closely-watched press conference 30 minutes after the release of the Fed's statement, as investors look for any change in tone about the economy or future rate hikes.
The central bank will also release its latest forecasts for economic growth and interest rates.
Investors all but ruled out a rate hike in June after U.S. employment data earlier this month showed the economy added just 38,000 jobs last month, the smallest increase since September 2010.
Market players are pricing in just a 2% chance for a rate hike this week and 23% for July, according to CME Group's (NASDAQ:CME) FedWatch tool. September odds were at about 37%.
Traders will digest a report on U.S. retail sales at 12:30GMT, or 8:30AM ET, Tuesday while awaiting the conclusion of the Fed meeting.
The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.15% to 94.56, up sharply from last week’s lows of 93.41.
Gold for August delivery on the Comex division of the New York Mercantile Exchange dipped $5.25, or 0.41%, to trade at $1,281.65 a troy ounce by 06:48GMT, or 2:48AM ET.
A day earlier, gold rallied to $1,290.30, the most since May 16, amid mounting jitters over the upcoming referendum on whether the U.K. would remain in the European Union. Recent polls suggested support for the campaign to leave the bloc is gaining momentum.
Prices of the precious metal are up nearly 6% so far in June, after sliding more than 6% a month earlier, as market players reacted to shifting views on the timing of the next U.S. rate hike.
Gold is up 20% so far this year amid skepticism over the Federal Reserve's ability to raise interest rates as much as it would like this year.
The yellow metal is sensitive to moves in U.S. interest rates. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
Elsewhere on the Comex, silver futures for July delivery shed 10.3 cents, or 0.59%, to trade at $17.34 a troy ounce during morning hours in London, while copper futures inched down 0.6 cents, or 0.27%, to $2.048 a pound.