May 21 (Reuters) – Gold prices dropped on Tuesday to the lowest in more than two weeks, as the dollar strengthened along with equities and other riskier assets ahead of the U.S. Federal Reserve’s release of minutes from its latest meeting.
Spot gold fell 0.3% to $1,273.70 per ounce as of 2:24 p.m. EDT (1824 GMT). The session low of $1,268.97 was its lowest since May 3.
U.S. gold futures settled down 0.3% at $1,273.20.
“What we are seeing, in a strange way, money is flowing towards the dollar as a safe-haven,” said Bart Melek, head of commodity strategies at TD Securities in Toronto.
“Also, we have little bit of risk appetite on the stock futures, so less of a reason to go into gold as a hedge,” he added.
International equities markets strengthened after the United States temporarily relaxed curbs on China’s Huawei Technologies, easing worries about further escalation of the U.S.-China trade war.
The dollar index climbed to its highest in nearly a month, supported by the U.S.-China trade war and higher U.S. Treasury yields.
“Precious metals prices have come under pressure across the complex as trade tensions have heightened, the U.S. dollar has strengthened and U.S. Treasury yields have edged higher,” Standard Chartered analysts said in a note.
“Gold prices have tumbled to test the lows for the month ahead of the FOMC May meeting minutes due on 22 May. Our economists expect the minutes to emphasize patience and data-dependency.”
The Fed minutes are expected to provide insights into the May 1 central bank meeting in which policymakers decided to keep interest rates steady and signaled little appetite to adjust them any time soon.
On Monday, Fed Chair Jerome Powell said it was premature to ascertain the impact of trade and tariffs on monetary policy.
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