Gold relatively flat in cautious trade ahead of release of Fed minutes

Investing.com - Investing.com -- Gold ticked up on Wednesday halting a four-day losing streak, as investors remained cautious ahead of the release of the Federal Reserve's minutes from its January meeting in the afternoon session.
On the Comex division of the New York Mercantile Exchange, gold for April delivery traded in a tight range between $1,196.30 and $1,214.60 an ounce, before settling at $1,210.20, up 2.00 or 0.17% on the session. Previously gold slumped more than 3.5% during the skid, erasing most of its gains from last Thursday's surge when it jumped by more than $60 an ounce to reach its highest level in roughly a year. The precious metal is still up by approximately 13.5% since the start of the new year and is on pace for one of its stronger quarters in 30 years.
Gold likely gained support at $1,063.20, the low from January 4 and was met with resistance at $1,260.80, the high from Feb. 11.
For the most part, investors were hesitant to make any major moves before the Fed released the minutes from its January Federal Open Market Committee (FOMC) meeting on Wednesday afternoon at 2 pm EST. At the meeting, the FOMC voted unanimously to hold its benchmark Federal Funds Rate at a targeted range between 0.25 and 0.50%. It came roughly one month after the FOMC abandoned a seven-year zero interest rate policy on December 16, by increasing the rate 25 basis points in a historic decision.
In its January monetary policy statement, the FOMC appeared uncertain on the short-term outlook of the U.S. economy by noting that it will "closely monitor economic developments," before its next meeting in mid-March. While testifying before Congress last week, Fed chair Janet Yellen warned that foreign economic developments and volatility in the global financial markets could pose risks to U.S. economic growth. It represented a stark departure from her comments in December, when Yellen emphasized that downside risks from global market turmoil had abated, clearing the way for a rate hike.
Before the release, Federal Reserve Bank of Minneapolis president Neel Kashkari indicated that a March rate hike will still be on the table if the economy continued to grow and inflation moved back toward the Fed's targeted goal of 2%. On Wednesday, the U.S. Department of Labor said its Producer Price Index (PPI-FD) for January rose 0.1%, exceeding expectations for a decline of 0.2%. The Core PPI, which strips out food and energy prices, increased by 0.6% on an annual basis, extending gains from December when it rose by 0.3% over the previous 12 months.
"Since January, the data has been mixed. We're going to keep watching the data and decide in March or beyond when is the right time to move", Kashkari told CNBC.
The January minutes could also show whether the FOMC internally discussed the ramifications of implementing a negative interest rate policy at the meeting. Since the FOMC issued its January monetary policy statement, the Bank of Japan unexpectedly lowered interest rates below zero two days later while Sweden's Riksbank pushed rates deeper into negative territory last week. While Yellen told legislators on Capitol Hill that it is unlikely the Fed will cut rates in the near-term future, she did not rule out adopting a negative rate policy if necessary.
Any rate hikes by the Fed this year are considered bearish for gold, which struggles to compete with high-yield bearing assets in rising rate environments.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.10% to an intraday low of 96.65. The index is down approximately 1.7% since the BOJ's surprising decision.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for March delivery gained 0.021 or 0.14% to 15.355 an ounce.
Copper for March delivery jumped 0.024 or 1.16% to 2.075 a pound.