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Gold Prices Pull Back from Near 5-Month High Ahead of Fed Beige Book

Investing.com - Gold prices pulled back from near a 5-month high in holiday-thinned trade on Wednesday with investors looking ahead to the Federal Reserve’s Beige Book for further indications on the health of the U.S. economy.

At 8:10 AM ET (13:10 GMT), gold futures for February delivery on the Comex division of the New York Mercantile Exchange fell $3.75, or 0.30%, to $1,242.85 a troy ounce, after touching $1,247.50 a day earlier, its highest level since July 2018.

Although U.S. financial markets are closed in honor of former President George H.W. Bush's funeral, the Federal Reserve will still release its Beige Book at 2:00 PM ET (19:00 GMT) which will give insight into the current economic conditions of the 12 Fed districts.

An upbeat reading could help put the brakes on the recent downward trend seen in the dollar, which has buoyed gold prices of late. Weakness in the American currency increases the appeal of dollar-denominated gold as it becomes more affordable for holders of foreign currencies.

The dollar index rose to the highest levels of the year in early November, supported by a robust U.S. economy and a relatively hawkish Fed, which forecast moving ahead with gradual rate hikes.

But as the Dec. 18-19 monetary policy looms just over the horizon, the greenback came under pressure last week when the market took comments from Fed chairman Jerome Powell as signaling a slower pace of rate hikes.

That more dovish tone led markets to question how many times the central bank will hike rates in 2019. Markets still expect the Fed to move forward with a quarter-point hike this month, but have interpreted cautious remarks from policymakers to mean that further tightening in 2019 will have to be reevaluated on economic and inflation data.

In other metals trading, silver futures dropped 0.49% at $14.568 a troy ounce 8:13 AM ET (13:13 GMT).

Palladium futures gained 0.95% to $1,191.40 an ounce, while sister metal platinum fell 0.61% at $799.30.

In base metals, copper edged forward 0.14% to $2.763 a pound.

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