Gold futures on the COMEX division of the New York Mercantile Exchange fell on Wednesday as the U.S. dollar showed strength ahead of the press conference about the U.S. Federal Reserve's interest rates.
The most active gold contract for August delivery lost 3.6 U.S. dollars, or 0.33 percent, to settle at 1,092.60 dollars per ounce.
A press conference is expected after the market's close where the U.S. central bank will indicate their thinking on the increase of an interest rate. Analysts originally expected interest rates to rise in June, but due to weaker-than-expected employment data, expectations were pushed back to September. An increase in the Fed 's interest rate drives investors away from gold and towards assets with a return, as the precious metal bears no interest. There has not been an increase in the Fed's interest rate since June 2006, before the beginning of the American financial crisis.A report released by the National Association of Realtors on Wednesday gave support to the price of gold as it showed pending sales of existing homes falling by 1.8 percent in June. This was worse than expected. Analysts note that weakness was in the South and Midwest, while the West and Northeast showed slight gains.
The U.S. Dollar Index rose by 0.11 percent to 96.76 as of 17:20 GMT. The index is a measure of the dollar against a basket of major currencies. Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors.
Silver for September delivery rose 10.1 cents, or 0.69 percent, to close at 14.743 dollars per ounce. Platinum for October delivery fell 1.5 dollars, or 0.15 percent, to close at 984.90 dollars per ounce.