Gold eases below $2,000 as greenback steadies ahead of FOMC minutes

Gold prices declined below $2,000 an ounce after rising to a 1-week peak in the previous session as the dollar steadied, while investors await minutes from the U.S. Federal Reserve’s last policy meeting.

Spot gold was trading 0.6 percent down at $1,990.21 per ounce by 0616 GMT, having hit a high of $2015.72 on Tuesday, its highest since August 11. U.S. gold futures fell 0.7 percent to $1,998.50.

The dollar index steadied after hitting a more than 2-year low in the prior session as better-than-expected U.S. economic data lifted risk sentiment.

The U.S. homebuilding accelerated by the most in nearly four years in July in the latest sign the housing sector is emerging. Data released yesterday showed housing starts increased 22.6 percent to a seasonally adjusted annual rate of 1.496 million units, the biggest gain since October 2016, while figures for June were revised up to a 1.22 million-unit pace from the previously reported 1.186 million.

Asian shares surged to a 7-month peak, tracking the S&P 500, which recorded all-time highs driven by ever expanding policy stimulus aimed at cushioning the blow to economies from the coronavirus pandemic.

The dollar has lost near 1.5 percent over the last 7-days as the ongoing effects of the Federal Reserve’s stimulus programmes weakened the greenback broadly. Additionally, uncertainties about an economic recovery and the U.S. fiscal stimulus package further weakened the bid tone around the greenback.

Investors remained uncertain over whether the U.S. lawmakers would agree on an additional fiscal stimulus, although U.S. House of Representatives Speaker Nancy Pelosi said that Democrats in Congress are willing to cut their coronavirus relief bill in half to get an agreement on new legislation with the White House and Republicans.

On Tuesday, the selling pressure around the dollar intensified after President Donald Trump said a big shift to mail-in voting in the November presidential election could cause so many problems officials might have to re-do the vote.

Investors showed limited reaction to Democrats formally nominating Joe Biden for president.

The greenback against a basket of currencies traded flat at 92.29, having touched a low of 92.13 on Tuesday, its lowest since May 2018. The U.S. Treasury yields rose, with the benchmark 10-year note yield trading at 0.669 percent.

Investors now await the release of the minutes from the July 28-29 FOMC meeting later in the day, with speculation the Fed will adopt an average inflation target, which would seek to push inflation above 2 percent for some time.