Investing.com - Gold futures edged lower in European trade on Wednesday, as market players looked ahead to minutes of the Federal Reserve’s March policy meeting for fresh indications on whether the U.S. central bank will raise interest rates at all this year.
Gold for June delivery on the Comex division of the New York Mercantile Exchange dipped $2.40, or 0.2%, to trade at $1,227.20 a troy ounce by 08:04GMT, or 4:04AM ET. A day earlier, gold rallied $10.30, or 0.84%, as steep declines in global equity markets underpinned demand for assets perceived as safer.
Investors will be focusing on minutes of the Federal Reserve’s March policy meeting due at 18:00GMT, or 2:00PM ET, for some clarity on where the U.S. central bank stands on its path toward rate hikes.
The Fed surprised markets following the conclusion of its policy meeting on March 16 by cutting its rate hike projection for this year to two from the four it had previously projected, citing the potential impact from weaker global growth on the U.S. economy.
Traders will also be paying attention to speeches by Cleveland Fed President Loretta Mester, St. Louis Fed President James Bullard and Dallas Fed President Rob Kaplan later in the day to further judge the balance of opinion among policymakers on the prospect of further rate hikes.
Fed Chair Janet Yellen last week assured markets the central bank would be cautious in raising rates, stating that there are plenty of risks to its forecast.
Data on Tuesday showed that the U.S. trade deficit widened more than expected in February, the latest indication that economic growth in the world's largest economy weakened further in the first quarter.
The Federal Reserve Bank of Atlanta on Tuesday cut its estimate for U.S. first-quarter economic growth from 0.7% to 0.4%, which would be its slowest growth in two years.
Traders expect only one rate hike this year by the Fed, according to the CME Group's (NASDAQ:CME) FedWatch program. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
Prices of the yellow metal are up nearly 14% so far this year as expectations faded that the Fed would move to normalize interest rates due to fears over a China-led global economic slowdown.
Gold is sensitive to moves in U.S. rates, as a rise would lift the opportunity cost of holding non-yielding assets such as bullion.
Also on the Comex, silver futures for May delivery shed 3.1 cents, or 0.21%, to trade at $15.08 a troy ounce during morning hours in London, while copper futures inched up 0.8 cents, or 0.37%, to $2.146 a pound.
Data released earlier showed China's service sector strengthened in March. The Caixin services purchasing managers' index rose to 52.2 last month, up from February's reading of 51.2. A reading above 50 indicates expansion.
The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.