Gold climbs toward $1,900, looks to extend rise to 4-month highs ahead of Fed minutes

“Gold prices are still likely to continue to move higher, and the only event which matter now is the upcoming Fed minutes,” said Naeem Aslam, chief market analyst at AvaTrade.

The Fed will release minutes from its most recent policy meeting in April at 2 p.m. Eastern Time, shortly after gold futures settle for the session. Investors will look for clues on how the central bank will address evidence of pricing pressures building in the economy, which officials have so far described as transitory.

“If the Fed shows no hawkish side, we could see further gains for the gold price,” said Aslam.

June gold GCM21, +0.92%   GC00, +0.92% rose $22.80, or 1.2%, to $1,890.80 an ounce after trading as high as $1,891.30. Prices were on track for a fifth straight climb. The modest move up on Tuesday was enough to mark the most active contract’s highest finish since Jan. 7, FactSet data show.

“The minutes are expected to reiterate the Fed’s dovish stance, highlighting any rise in inflation as transitory,” wrote Sophie Griffiths, market analyst at Oanda, in a note.

Buying in gold had been supported by waning appetite for risk, weakness in the U.S. dollar, represented by the popular ICE U.S. Dollar Index DXY, +0.16% hitting a nearly three-month low. However, on Wednesday, the buck was rebounding.

Commodities priced in dollars, such as gold, can trade inversely with the dollar, as moves in the U.S. unit can influence the attractiveness of those commodities to holders of other currencies.

“Dovish minutes could propel the precious metal higher. Until then, dollar dynamics are expected to drive movement in gold,” Griffiths wrote.

Precious metal investors fear that out-of-control inflation could prompt the Fed to rapidly lift benchmark interest rates — a move that would weigh on bullion that doesn’t offer a coupon.

“Buyers are moving to gold, in response to a combination of factors. The two most notable are surely the weakness of the greenback, with the dollar index at its lowest for 3 months, and inflation fears,” wrote Carlo Alberto De Casa, chief analyst at ActivTrades.

“Moreover, risk-on has slowed down, with a moderate shift to risk-off assets such as gold,” he said.

Meanwhile, July silver SIN21, -1.21%  edged down by 4.8 cents, or 0.2%, to nearly $28.29 an ounce, following a 0.2% rise on Tuesday.

July copper HGN21, -3.87% shed 3.2% to $4.57 a pound. July platinum PLN21, -2.55% lost 1.6% to $1,206 an ounce and June palladium PAM21, -1.09% traded at $2,869 an ounce, down 1.2%.