Investing.com - Gold prices inched higher in familiar range on Tuesday, as investors kept an eye on upcoming U.S. data to gauge if the world's largest economy is strong enough to withstand further rate hikes in 2016.
Trading volumes are expected to remain light in the final few days of the year as many traders already closed books due to the holiday period, reducing liquidity in the market which could result in exaggerated moves.
Gold for February delivery on the Comex division of the New York Mercantile Exchange tacked on $4.60, or 0.43%, to trade at $1,072.90 a troy ounce during European morning hours. A day earlier, gold dipped $7.60, or 0.71%.
Market participants were eyeing a report on U.S. consumer confidence due later in the day after mixed economic reports released last week failed to offer clues as to how fast the U.S. central bank will raise interest rates next year.
With the first U.S. rate hike since 2006 out of the way, investors are now focusing on the pace of future rate increases. The Federal Reserve, from its forecasts, is anticipating four rate hikes next year. However, the Fed funds futures currently suggests there will be just two rate increases, one in June and one in December.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.1% at 97.90. The index has fallen back to levels seen before the Fed raised interest rates on December 17 as investors booked profits on their bullish dollar bets before the end of the year.
Gold is on track to post an annual decline of approximately 10% in 2015, the third yearly loss in a row, as speculation over the timing of a Fed rate hike dominated market sentiment for most of the year.
Meanwhile, silver futures for March delivery climbed 14.1 cents, or 1.02%, to trade at $14.02 a troy ounce. Silver is on track to post an annual decline of nearly 10% in 2015.
Elsewhere in metals trading, copper rose 3.4 cents, or 1.63%, to $2.118 a pound. The red metal is on track to post an annual decline of almost 30% in 2015 as fears of a China-led global economic slowdown spooked traders and rattled sentiment.
The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.