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Fed minutes due on Wednesday
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Traders await U.S. PCE, GDP data
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Euro zone business growth at 9-month high
(Updates prices)
By Seher Dareen
Feb 21 (Reuters) - Gold prices fell on Tuesday on a rise
in the dollar while investors awaited U.S. economic data to
gauge the Federal Reserve's interest rate strategy.
Spot gold fell 0.5% to $1,832.39 per ounce by 1257
GMT. U.S. gold futures eased 0.5% to $1,841.40.
The dollar index hovered around its highest in six
weeks, making dollar-priced gold more expensive for buyers
holding other currencies. "Gold's primary driver remains the shifting expectations
surrounding the Fed's next policy moves, with perhaps more clues
to be found within the upcoming FOMC minutes release," said Han
Tan, chief market analyst at Exinity.
"Should the U.S. economy continue defying the Fed's rate
hikes, that could invite a higher peak for U.S. rates, much to
the chagrin of bullion bulls."
The focus this week will be on the release of the Federal
Open Market Committee's January meeting minutes on Wednesday,
followed by U.S. gross domestic product data on Thursday and
Friday's core PCE price index.
Gold prices hit their highest since April 2022 early this
month at $1,959.60, but have since lost around $130 after U.S.
data showed signs of a resilient economy.
"As investors price in the renewed hawkishness of the
Federal Reserve, the dollar is likely to continue to strengthen,
meaning there may be further downside for gold prices," senior
analyst Ricardo Evangelista of ActivTrades wrote in a note.
High interest rates discourage investors from placing money
in non-yielding assets such as gold.
Meanwhile, a recovery in euro zone business activity
gathered steam this month, a survey showed, providing the latest
evidence the currency union could escape a recession.
Britain, France and the United States are also due to
publish flash February PMI data on Tuesday, with traders
watching for signs of tighter monetary policy taking a toll on
business activity.
In other metals, silver was steady at $21.74 per ounce, platinum gained 0.2% to $928.55 while palladium was down 0.2% to $1,507.79. (Reporting by Seher Dareen and Rahul Paswan in Bengaluru; editing by Barbara Lewis and Jason Neely)
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