Gold Edges Lower As Dollar Gains, Investors Await Fed Outcome

Gold slipped Tuesday and hovered near a five-week high as investors prepare for a key monetary-policy statement from the United States Federal Reserve due on Wednesday.

- Spot gold declined 0.20 percent or 2.66 points to $ 1,32326.02

Investors turned their attention to a two-day meeting by the U.S. Federal Open Market Committee, which crafts interest-rate policy. The Fed is expected to release its latest statement on Wednesday afternoon amid wide expectations that it would affirm its near-zero interest rate stance.

The increase in the dollar also pressured gold prices, where the index pulled up from a five-week low against major peers as the market approaches the conclusion of the FOMC meeting and the release of a slew of U.S. economic data which includes July employment report and second-quarter gross domestic product (GDP).

The advanced second quarter GDP report, to be released Wednesday, is expected to be somewhat modest at 1.0 percent growth in the second-quarter. While the July employment report, due on Friday, is expected to show a steady pace of job growth.

The Dollar index, which tracks the value of the U.S. dollar against a basket of six other major currencies, rose to 81.85 after opening at 81.80 while recoding its highest at 81.79.

The European Central Bank (ECB) and the Bank of England (BoE) are also due to hold their monetary policy meeting this week. Both central banks are expected to maintain their pledge to keep monetary policy loose at their respective meetings on Thursday.

The International Monetary Fund trimmed its 2013 Platinum forecast for a fifth time at the start of the month of July to 3.1 percent, citing slower economic growth which could curb demand for metals tied to industry. However, record car sales and mining strikes mean the best forecasters are favoring platinum over gold.

- As 2:39 ET, spot platinum dropped 0.36 percent or 5.20 points to $ 1,439.65

- Platinum-backed ETP holdings rose as much as 22.7 metric tons this year, or 50 percent

Silver which was the worst performing commodity this year, is forecasted to drop further 12 percent to a new three-year low after tumbling into a bear market in April along with gold.

- As of 2:39 ET, spot silver dropped 0.54 percent or 0.11 points to $ 19.81

- The silver exchange-traded fund, iShares Silver Trust (SLV) fell 0.60 percent.