Investing.com -- Gold inched up/inched on Tuesday amid a relatively flat dollar, as mixed U.S. economic data likely did little to sway the Federal Reserve in either direction ahead of a highly-anticipated interest rate decision from the U.S. central bank next month.
On the Comex division of the New York Mercantile Exchange, gold for August delivery traded between $1,207.50 and $1,218.55 an ounce before settling at $1,217.15 up 0.45 or 0.04% on the session. Gold is coming off one of its worst weeks of the year when it plunged more than 2.5%, as investors reacted to strong indications from the Fed that it could raise interest rates when it meets again in mid-June. Since hitting 15-month highs around $1,300 an ounce at the start of May, gold has plummeted more than $80 an ounce. Still, the precious metal is holding onto massive gains from the first quarter and is on pace for one of its strongest first halves of a year in more than a decade.
Gold likely gained support at $1,125.00, the low from February 3 and was met with resistance at $1,304.40, the high from May 2.
On Tuesday morning, the U.S. Commerce Department's Bureau of Economic Analysis said its Personal Consumption Expenditures (PCE) Price Index rose by 0.3% in April, in line with consensus estimates. It came as consumer spending surged 1.0% on the month, considerably above a downwardly revised flat reading from March. At the same time, personal income increased by 0.4% on the month also line with analyst's forecasts.
The Core PCE Index, which strips out volatile food and energy prices, ticked up 0.2% from March's reading, one month after experiencing slight gains of 0.1%. On an annual basis, the core reading rose by 1.6% unchanged from the previous month. The Core PCE Index is the Fed's preferred gauge of long-term inflation. While inflation has firmed somewhat in recent months, it has stubbornly remained under the Fed's 2% targeted objective for the majority of the last three years.
There is currently a 20.6% probably the Fed will raise interest rates in June, according to CME Group's (NASDAQ:CME) Fed Watch tool, up from 11.3% a month earlier. The Federal Open Market Committee (FOMC) has left its benchmark Federal Funds Rate at its current level between 0.25 and 0.50% in each of its first three meetings this year. Some analysts believe the FOMC could wait until after a controversial Brexit vote on June 23 before approving its first rate hike of the year. Following the FOMC's July meeting, the CME Group says there is a 48.6% chance that the target range of the Fed Funds Rate will be between 0.50 and 0.75%, up from 26.0% a month ago.
Any rate hikes by the Fed this year are viewed as bearish for Gold which struggles to compete with high-yield bearing assets in rising rate environments.
In Asia, the FTCR China Business Activity Index slumped to a four-month low in May, as weak freight and export conditions pulled down the overall reading. China is the world's largest producer of gold and the world's second-largest consumer of the yellow metal behind India.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, gained more than 0.05% to an intraday high of 95.84. The index is still down by more than 4% since early-December.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for July delivery plunged 0.244 or 1.50% to $16.025 an ounce.
Copper for July delivery fell 0.020 or 0.95% to $2.094 a pound.