Investing.com - Gold futures fell sharply on Monday, but still stuck in familiar trading range, as market players prepared for the first U.S. rate hike since 2006 later this week.
The Federal Reserve is widely expected to raise interest rates for the first time in nearly a decade at the conclusion of its two day policy meeting at 2:00PM ET on Wednesday. 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 Fed's statement, as investors look for signals about the path of future rate hikes. Many in the market anticipate the pace of increases to be gradual amid concerns over tepid growth overseas and divergent monetary policies between the U.S. and other nations.
The dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was up 0.4% to 98.00. Dollar-priced commodities become more expensive to investors holding other currencies when the greenback gains.
Gold for February delivery on the Comex division of the New York Mercantile Exchange slumped $10.30, or 0.96%, to trade at $1,065.60 a troy ounce during European morning hours. On Friday, gold fell to $1,061.70, the lowest since December 4.
The yellow metal is on track to post an annual decline of 9% in 2015, the third yearly loss in a row, as speculation over the timing of a Fed rate hike dominated market sentiment for most of the year. 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.
Meanwhile, silver futures for March delivery dipped 8.9 cents, or 0.64%, to trade at $13.79 a troy ounce. Prices slumped to a daily low of $13.75 on Friday, a level not seen since August 2009.
Elsewhere in metals trading, copper fell from a two-week high on Monday, as a broadly stronger U.S. dollar reduced the appeal of the red metal, but losses were limited following the release of better than expected Chinese economic data over the weekend.
The National Bureau of Statistics said Saturday that industrial production rose by an annualized rate of 6.2% in November, the fastest pace in five months.
The Asian nation is the world's largest copper consumer, accounting for nearly 45% of world consumption.
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