Investing.com - Gold prices were higher in early dealings on Wednesday, extending gains from the last session as investors looked ahead to minutes of the Federal Reserve’s latest policy meeting for further hints on the likely trajectory of monetary policy in the U.S. in the months ahead.
Comex gold futures were up about $2.00, or around 0.2%, to $1,283.53 a troy ounce by 3:00AM ET (0800GMT). Trading was thinning out ahead of Thursday’s Thanksgiving holiday in the U.S., according to market participants.
The yellow metal rose 0.5% on Tuesday as the U.S. dollar headed lower.
The Fed will release minutes of its most recent policy meeting at 2:00PM ET (1900GMT). The U.S. central bank left interest rates unchanged following its meeting on Nov. 1 and signaled it still intended to raise rates in December, as officials noted “solid” economic growth and a tightening labor market.
Outgoing Fed Chair Janet Yellen said Tuesday that the Fed is "reasonably close" to its goals and should keep gradually raising interest rates to avoid the dual pitfalls of letting inflation drift below target for too long, and of driving unemployment down too far.
The Fed is scheduled to hold its final policy meeting of the year on Dec. 12-13, with interest rate futures pricing in a 100% chance of a rate hike at that meeting, according to Investing.com's Fed Rate Monitor Tool. For 2018, the U.S. central bank is currently forecasting three interest rate hikes, but the markets expect two at most.
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.
On the data front, the Commerce Department will publish a report on October durable goods orders at 8:30AM ET (1330GMT). Besides the durable goods report, Wednesday's calendar also features U.S. data on initial jobless claims and revised Michigan consumer sentiment.
U.S. markets will be closed Thursday for the Thanksgiving holiday and Friday will be a half-session day.
Meanwhile, on the political front, tax reform will likely stay at the forefront, as markets look for any new developments on the Trump Administration's tax bill. Last week, the House voted to pass a tax bill that would lower corporate taxes and cut individual taxes for most households in 2018, in a step towards the biggest U.S. tax code overhaul since the 1980s.
But the legislation may face a tougher fight in the Senate amid resistance within Republican ranks. Senate lawmakers are expected to vote on their version of the bill after this week’s Thanksgiving holiday.
More than two Republican defections would likely kill the bill. Wisconsin Senator Ron Johnson has already publicly stated he opposes the bill in its current form.
In other metals trading, silver futures rose 6.8 cents, or 0.4%, to $17.02 a troy ounce, platinum was largely unchanged at $937.90, while palladium inched up 0.3% at $999.58 an ounce.
Meanwhile, copper futures added 1.2 cents, or 0.4%, to $3.140 a pound.