Investing.com -- Gold inched down on Wednesday, amid a recovering dollar, as cautious investors awaited the release of the Federal Reserve's minutes from its July meeting for further indications on the timing of the U.S. central bank's next interest rate hike.
On the Comex division of the New York Mercantile Exchange, Gold for December delivery traded between $1,346.15 and $1,353.20 an ounce before settling at $1,348.75, down 8.45 or 0.61% on the session. Gold has fallen slightly, by approximately 1%, since hitting 28-month highs at $1,371.80 in early-July. Since opening the year around $1,075 an ounce, however, the precious metal has soared more than 25% over the first seven months of 2016 and is on pace for one of its strongest years in the last three decades.
Gold likely gained support at $1,323.50, the low from June 8 and was met with resistance at $1,391.40 the high from March 17, 2014.
Gold remained stuck in tight, range-bound trade ahead of the Federal Open Market Committee's (FOMC) release of the minutes from its July meeting on Wednesday afternoon at 2 p.m. EST. Last month, the FOMC voted 9-1 to hold the target range of its benchmark Federal Funds Rate steady at its current level between 0.25 and 0.50%. Kansas City Fed president Esther George served as the lone dissenter, voting for a rate hike of 25 basis points. The FOMC has left short-term interest rates unchanged in each of its first five minutes this year.
The minutes, though, could provide further insight on the pace of the Fed's current tightening cycle. Earlier this week, market players increased the probability of a near-term rate hike after New York Fed president William Dudley said it could be appropriate to raise interest rates in the coming months, while not ruling out a September rate hike. There is currently an 18% chance the FOMC will raise rates at its September meeting, according to the CME Group's (NASDAQ:CME) FedWatch tool, up from around 9% in Monday's session. In addition, the CME Group placed the probability of a December rate hike at 45.5%, up from around 42% on Monday.
Investors who are bullish in Gold are in favor of a gradual tightening cycle from the FOMC. Gold struggles to compete with high-yield bearing assets in rising rate environments.
The FOMC could also provide more detail into the participants' decision-making process last month in their first meeting since June's Brexit shock spilled over into global markets. At its July meeting, the FOMC indicated that it will continue to closely monitor inflation indicators, as well as global economic and financial developments. Long-term inflation continues to run below the Fed's 2% targeted objective.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rose by more than 0.15% to an intraday high of 95.04. It came one day after the index crashed by nearly 1% to an intraday low of 94.38, its lowest level since June 27. Since hitting a four-month high at 97.62 in late-July, the Dollar has retreated by more than 2%.
Dollar-denominated commodities such as Gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for September delivery fell 0.262 or 1.32% to 19.612 an ounce.
Copper for September delivery lost 0.019 or 0.87% to 2.153 a pound.