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Gold slides ahead of Fed minutes

Published 05/24/2017, 08:03 AM
© Reuters.  Gold slides ahead of Fed minutes

Investing.com - Gold prices were lower in North American trade on Wednesday, nursing overnight losses as investors looked ahead to minutes of the Federal Reserve’s latest policy meeting due later in the day.

Comex gold futures shed $3.30, or around 0.3%, to $1,252.23 a troy ounce by 8:00AM ET (12:00GMT). Meanwhile, spot gold was at $1,252.36.

Prices of the yellow metal lost around $6.00 on Tuesday, as the U.S. dollar pulled away from recent six-and-a-half-month lows.

The Fed will release minutes of its most recent policy meeting at 2:00PM ET (18:00GMT), as traders seek further insight into the likelihood of higher interest rates in the months ahead. The publication is also expected to provide some details on the Fed's discussions about shrinking its massive $4.5 trillion balance sheet.

The U.S. central bank left interest rates unchanged following its meeting on May 3 and gave a positive assessment of the U.S. economy, suggesting it was still on track for two more rate hikes this year.

But a recent run of disappointing U.S. economic data combined with signs of deepening political turmoil surrounding the Trump administration raised doubts over the Fed's ability to raise rates as much as it would like before the end of the year.

Futures traders are currently pricing in around an 80% chance of a hike at the Fed's June meeting, according to Investing.com’s Fed Rate Monitor Tool, while odds for a second rate hike by December were at about 40%.

Besides the Fed, Wednesday's calendar also features existing home sales and home prices data, both of which will take on extra importance after Tuesday's report of slumping April new home sales.

Also on the agenda, Mick Mulvaney, director of the Office of Management and Budget, is scheduled to appear before the House Budget Committee at 9:30AM ET. Treasury Secretary Steven Mnuchin appears before the House Ways and Means Committee at 2PM ET.

Meanwhile, President Donald Trump continues his overseas trip, arriving in Italy, where he met with Pope Francis. The president is scheduled to meet with NATO members and attend the G-7 summit starting Friday.

The dollar index, which tracks the greenback against a basket of six major rivals, was at 97.25 in New York morning trade. It fell to the lowest since November 9 at 96.70 at the start of the week, amid concerns surrounding the Trump election campaign's suspected links with Russia.

Also on the Comex, silver futures declined 3.9 cents, or about 0.2%, to $17.10 a troy ounce.

Elsewhere in metals trading, platinum slipped 0.4% to $945.70, while palladium dipped 0.1% to $771.65 an ounce.

Among industrial metals, copper futures lost 2.1 cents to $2.575 a pound, while nickel slumped 1.8% and iron ore plunged more than 6% after Moody’s downgraded China's credit ratings for the first time in nearly 30 years.

The ratings agency cited expectations that the financial strength of the world's second-biggest economy would erode in the coming years as growth slows and debt continues to rise.

China is the world's top user of such materials.

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