Investing.com - Gold dipped in Asia on Wednesday after Moody's Investors Service on Wednesday downgraded China's credit rating to A1 from Aa3, changing its outlook to stable from negative, citing expectations that China's financial strength will erode somewhat over the coming years.
Gold for June delivery on the Comex division of the New York Mercantile Exchange eased 0.30% to $1,251.69 a troy ounce. China regularly view with India as the world's top gold importer and a slowdown in demand would weigh on sentiment.
Investors look ahead to the release of the Federal Reserve’s minutes for its April meeting on Wednesday, to gauge whether the Fed’s outlook concerning monetary policy has been impacted by recent economic data and geopolitical developments.
Overnight, gold futures pared gains Tuesday amid growing expectations that the Federal Reserve would increase its benchmark rate in June, which pushed the dollar off the lows, denting demand for the precious metal.
According to investing.com’s Fed rate monitor tool, nearly 80% of traders expect the Fed to hike interest rates in June, compared to only 67% of traders in the previous week.
The jump in June rate hike expectations came against the backdrop of weaker than expected economic data, which failed to offset June rate hike expectations, as treasury yields and the dollar rose to session highs, reducing investor sentiment to hold bullion.
IHS Markit flash U.S. manufacturing purchasing managers index (PMI) fell to its lowest level in eight months with a reading of 52.5, while its services (PMI) soared to a four-month high with a reading of 54, which was above economists’ forecasts.
A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
In a separate report on Tuesday, the Commerce Department said sales of newly constructed homes fell in April to a seasonally adjusted annual rate of 569,000. That was below analysts’ estimates of a drop to 610,000.