Investing.com - Gold prices edge higher in European morning trade on Wednesday, but stayed near the lowest level in around five weeks as investors worried about future Federal Reserve rate hikes.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion.
Comex gold futures were at $1,247.85 a troy ounce by 3:35AM ET (0735GMT), up $4.25, or around 0.3%. Gold prices notched a second-straight decline on Tuesday after falling to its lowest since May 17 at $1,242.40.
Also on the Comex, silver futures were up 2.2 cents, or roughly 0.1%, to $16.43 a troy ounce, after hitting its lowest since May 12 at $16.36 a day earlier.
Market expectations for another Fed rate hike later this year have improved in wake of hawkish comments made by influential New York Fed Chief William Dudley earlier this week.
Dudley gave an upbeat assessment of the economy on Monday and warned against the central bank taking a pause in the tightening cycle. He added that U.S. inflation is a bit low but should rise alongside wages as the labor market continues to improve, allowing the Fed to continue gradually tightening U.S. monetary policy.
The remarks echoed similar comments made by Fed Chair Janet Yellen in last week’s press conference after the central bank hiked rates for the second time this year and maintained plans to go ahead with another rate hike by year-end.
The Fed also provided greater detail about how it plans to reduce its massive $4.5 trillion balance sheet.
Futures traders are pricing in around a 20% chance of a hike at the Fed's September meeting, according to Investing.com’s Fed Rate Monitor Tool. Odds of a December increase was seen at about 40%.
Market players will focus on U.S. housing data due later in the global day to gauge if a recent downtick in consumer spending and inflation is translating into lower home prices and slack in sales.
The National Association of Realtors is to release data on existing home sales for May at 10:00AM ET (1400GMT) amid forecasts for a decline of 0.7% to 5.55 million.
Among other precious metals, platinum was down 0.3% at $918.80, while palladium dipped 0.5% to $863.15 an ounce.