Gold declines before Fed outcome, Yellen remarks

Investing.com - Gold prices declined on Wednesday, ahead of the Federal Reserve's highly-anticipated policy statement due later in the day.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery shed $2.80, or 0.24%, to trade at $1,178.10 a troy ounce during U.S. morning hours. Futures held in a range between $1,177.50 and $1,182.10.

A day earlier, gold prices lost $4.90, or 0.41%, to close at $1,180.90. Futures were likely to find support at $1,168.50, the low from June 8, and resistance at $1,191.80, the high from June 10.

Also on the Comex, silver futures for July delivery dipped 3.2 cents, or 0.2%, to trade at $15.93 a troy ounce. Silver declined 11.8 cents, or 0.73%, on Tuesday to end at $15.96.

Later in the day, the Fed will publish its rate statement, which outlines economic projection and the factors affecting the monetary policy decision. The central bank will also release its latest forecasts for economic growth and interest rates.

Fed Chair Janet Yellen is to hold what will be a closely-watched press conference 30 minutes after the release of the statement, as investors look for any clear signal about a possible timeline for hiking interest rates.

Recent economic reports have indicated that the U.S. economy was regaining strength after contracting in the first quarter, fuelling speculation that the U.S. central bank could raise rates as soon as September.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.1% to 95.13 early on Wednesday, moving off Tuesday's highs of 95.50.

Meanwhile, concerns over the approaching deadline for Greece’s repayments to the International Monetary Fund persisted.

Europe wants Greece to make spending cuts worth €2 billion in order to secure a deal that will unlock additional funds before its bailout expires at the end of June and it must repay €1.6 billion to the IMF.

But comments by Prime Minister Alexis Tsipras on Tuesday in which he accused the county’s creditors of trying to "humiliate" Greece with more cuts indicated that Athens is sticking to a hard line in negotiations.

Failure to strike a deal would result in Greece defaulting on payments and exiting the euro zone.

Elsewhere in metals trading, copper for July delivery inched up 0.4 cents, or 0.16%, to trade at $2.620 a pound after hitting a daily low of $2.606, a level not seen since March 19.