Gold prices traded near a three-week peak on Wednesday, as the U.S. dollar slipped from its 14-year-high against a basket of currencies with investors taking profits before the release of minutes from the Federal Reserve’s December policy meeting later in the day.
Gold for February delivery on the Comex division of the New York Mercantile Exchange tacked on $1.60 (£1.30), or around 0.2%, to $1,163.65 (£948.41) a troy ounce.
A day earlier, gold rose to $1,166.00 (£950.32), a level not seen since December 14.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.2% at 103.04 in early trade, pulling back from Tuesday’s 14-year peak of 103.82.
The Fed will release minutes of its December policy meeting at 2:00PM ET (19:00GMT). The U.S. central bank hiked interest rates following its meeting on December 14, in a widely expected decision, and signalled it expects to raise interest rates three times in 2017, up from the two hikes predicted in September.
Market analysts warned that the outlook for gold remains cloudy in the near-term amid expectations of U.S. interest rates rising more rapidly during the incoming Trump Administration.
Prices of the yellow metal have fallen sharply since Donald Trump was elected president as a soaring U.S. dollar; rising Treasury yields and a record-breaking rally on Wall Street have dampened its appeal.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.
Both a strong dollar and higher interest rates are typically bearish for gold, which is denominated in dollars and struggles to compete with yield-bearing assets when borrowing costs rise.
Also on the Comex, silver futures for March delivery added 6.8 cents, or 0.4%, to $16.47 (£13.42) a troy ounce during morning hours in London.
Meanwhile, platinum dipped 0.3% to $941.20 (£767.11) and palladium rose 1.6% to $721.03 (£587.42) an ounce.
Elsewhere in metals trading, copper futures advanced 2.0 cents, or 0.8%, to $2.509 a pound amid indications global manufacturing sectors might be seeing a strong turnaround.