Investing.com -- Gold inched down in quiet trade, as investors remained cautious ahead of a closely-watched interest rate decision by the Federal Reserve on Wednesday afternoon.
On the Comex division of the New York Mercantile Exchange, Gold for August delivery traded between $1,281.00 and $1,290.05 an ounce before settling at $1,288.15, up 0.05 or 0.01% on the day. At session-highs, Gold cleared $1,290 for the first time in a month. With its current surge, Gold has erased all of its losses from late-May when it plummeted 5% during a nine-day losing streak. Gold has rebounded by rallying more than $75 an ounce since June 2. Since the start of the year, the precious metal has soared approximately 20% and is on pace for one of its strongest first halves in more than a decade.
Gold likely gained support at $1,125.00, the low from February 3 and was met with resistance at $1,304.40, the high from May 2.
On Wednesday afternoon, the Federal Open Market Committee (FOMC) is widely expected to hold its benchmark Federal Funds Rate steady upon the completion of its June monetary policy meeting. The FOMC has left the target range of the Fed Funds Rate unchanged between a level of 0.25 and 0.50% at each of its first three meetings this year. Last December, the FOMC ended a seven-year zero interest rate policy by approving its first rate hike in nearly a decade.
When the FOMC last met in April, the minutes from the meeting depicted a relatively hawkish committee ready to increase rates further. At an appearance at Harvard University in late-May, Fed chair Janet Yellen signaled that a rate hike could be appropriate in the coming months, as the domestic economy continued to improve and growth continued to pick up. Yellen later backtracked weeks later at a speech in Philadelphia when she removed all timing references to a potential rate hike following the release of weak employment data days earlier. In May, the labor market added 38,000 nonfarm payrolls, its lowest monthly total in six years.
While Yellen expressed concern on the slowing pace of job gains in the labor market, she emphasized the importance of not attaching too much significance to a single report. Yellen noted that the economy added 2.7 million jobs in 2015 or an average of 230,000 a month while the unemployment rate fell to 5%. Yellen also emphasized that while the U.S. economy has outperformed its global counterparts in recent months, significant headwinds from growth concerns in China and a potential U.K. departure from the European Union add uncertainty to the Fed's economic outlook.
Investors who are bullish on Gold are in favor of a gradual tightening of monetary policy by the Fed. Gold, which is not attached to interest rates, struggles to compete with high-yield bearing assets in rising rate environments.
Elsewhere, analysts at BlackRock said Wednesday that global markets have already priced in "half the move," of a potential Brexit, should voters in the U.K. decide to support a "Leave," campaign in next week's controversial referendum. Also on Wednesday, Hung Tan, executive managing director at the Institute of International Finance (IIF) in Washington D.C., called a Brexit departure a larger threat to the global economy than the collapse of Lehman Brothers in 2008 that helped trigger the Financial Crisis.
"It is not Lehman in the short term in terms of markets being in a panic or chaotic mood, because the central banks will try to pacify that," Tan told Bloomberg Briefs. "But it is more significant than Lehman in its longer-term impact on global growth. Through trade and investment channels, there will be a downward impact on growth."
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.25% to an intraday low of 94.70. The index is down by more than 5% since early-December. Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for July delivery gained 0.076 or 0.44% to $17.495 an ounce.
Copper for July delivery soared 0.049 or 2.43% to $2.091 a pound.
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