By Ambar Warrick
Investing.com -- Gold prices hovered slightly above a six-week low on Wednesday with markets remaining cautious ahead of the minutes of the Federal Reserve’s February meeting, while some stronger-than-expected U.S. economic data further supported the dollar.
Bullion prices were trading in a tight range for the week amid renewed concerns over more hawkish moves by the Fed, especially after stronger-than-expected inflation readings for January. Those, coupled with signs of resilience in the U.S. economy, give the Fed enough headroom to keep raising interest rates.
Spot gold was flat at $1,835.83 an ounce, while gold futures rose 0.1% to $1,844.70 an ounce by 19:13 ET (00:13 GMT). The Fed minutes, due later in the day, is widely expected to reiterate the bank's hawkish rhetoric.
Focus this week is also on Thursday’s Personal Consumption Expenditures price index reading, which is the Fed’s preferred inflation gauge. The index is expected to have remained relatively high in January.
Rising interest rates bode poorly for non-yielding assets such as gold and other precious metals, given that they drive up the dollar and Treasury yields and increase the opportunity cost of holding gold.
U.S. PMIs also read stronger than expected for February, data showed on Tuesday. Any signs of resilience in the U.S. economy give the Fed more space to keep hiking rates, which the bank has signaled that it intends to do in the near-term.
But concerns over an eventual U.S. slowdown still persisted, especially as other data showed on Tuesday that the housing market was under pressure.
Other precious metals kept to a tight range on Wednesday. Platinum futures rose 0.1% to $945.95 an ounce, while silver futures rose slightly to $21.900 an ounce.
Industrial metals were encouraged by the better-than-expected U.S. PMIs, with copper futures rising sharply on Tuesday.
High-grade copper futures hovered around a three-week high of $4.2170 a pound on Wednesday, after rising 0.8% in the prior session.
The red metal was also supported by some optimism over an economic recovery in China, especially after the country held interest rates at record-low levels this week.