NEW YORK (
Gold prices were slumping on Tuesday as a stronger U.S. dollar coupled with anticipation for the
Federal Reserve's minutes put downward pressure on the yellow metal. Gold prices
Gold for June delivery at the COMEX division of the CME was sliding $19.40 to $1,364.70 an ounce. The
gold price traded as high as $1,399.90 and as low as $1,358 an ounce, while the spot price was dropping $22.10, according to Kitco's gold index.
"It looks mostly like it's in reaction to a firmer dollar, which is I suppose logical given that we're headed into the Fed testimony," said James Steel, chief commodities analyst at
Silver prices for July delivery was dropping 43 cents to $22.16 an ounce, while the
U.S. dollar index was climbing 0.33% to $84.03.
Traders say minutes from the Fed's most recent policy-making meeting, which are due out on Wednesday, likely will be a huge mover for gold prices. A strong April nonfarm payrolls report and a raft of other sturdy economic data have led economists to say the Fed may hint at scaling back its quantitative easing programs.
Wall Street Journal
report emerged last week that suggested Fed members were thinking of scaling back monetary stimulus as economic data has improved.
Gold markets would view the Fed's move to reduce stimulus as a non-inflationary action. Investors and traders have seen the central bank's accommodative policy as inflationary, and gold is often deemed a hedge against inflation.
"With the Fed minutes anything can happen, it's going to be all about language,"
Mihir Dange, options trader at Grafite Capital, said in an interview
. "It's very possible we see a $30, $40, $50 move just on Fed minutes."
Gold mining stocks were mostly lower on Tuesday. Shares of
(EGO - Get Report)
were off 3.8%, and shares of
(AUY - Get Report)
were losing 3.6%.
Among volume leaders,
(ABX - Get Report)
was dropping 2.3%.
SPDR Gold Trust
was declining 1.8% to $132.73 a share, while
iShares Gold Trust
was slipping 1.8% to $13.33 a share.
-- Written by Joe Deaux in New York.