Investing.com – Gold prices traded slightly below breakeven on Tuesday, after a rise in treasury yields, dented investor appetite for the precious metal ahead of the Federal Reserve policy decision due Wednesday.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange fell by $2.29, or 0.18%, to $1,252.14 a troy ounce.
Although analysts widely expect the Federal Reserve to keep rates unchanged on Wednesday, treasury yields ticked higher, lowering demand for non-interest bearing gold, suggesting that market participants expect the central bank to keep to its recent stance monetary policy.
Following its decision to raise rates in June for the second time this year, the Fed said that the slowdown in inflation was transitory and signalled its intention to raise rates at least once more this year.
In a rising interest rate environment, investor appetite for gold weakens as the opportunity cost of holding the precious metal increases relative to other interest-bearing assets such as bonds.
Ahead of the Fed’s decision on interest rates, investors mulled over better-than-expected consumer confidence data, easing fears about a slowdown in the US economy.
The Consumer Confidence Index rose in July to 121.1 to a 16-year high, despite expectations for a drop, The Conference Board announced Tuesday.
Economists had forecast the major indicator of consumer optimism to decline to 116.5 in July.
In other precious metals, silver futures tacked on 0.54% to $16.531 a troy ounce while platinum futures added 0.04% to $932.65.
Copper traded at $2.842, up 3.86%, while natural gas, rose by 1.39% to $2.992.