London - Gold prices fell on Wednesday, under pressure from gains in the dollar and uncertainty over whether the U.S. Federal Reserve will begin curbing its bullion-friendly economic stimulus measures from next month.
Investors are awaiting the release of minutes of the Fed's July meeting at 1800 GMT, which could give an indication of whether the Fed could begin tapering its $85 billion monthly bond-buying programme as early as September.
Spot gold fell 0.3 percent to $1,366.25 by 1222 GMT, while U.S. gold futures for December delivery were down $6.50 an ounce at $1,366.10. On Monday gold hit a two-month high at $1,384.10.
Speculation that the Fed is set to curb its quantitative easing programme, which helped drive gold prices to record highs in 2011, has pushed the metal down by nearly a fifth this year, but investors remain unclear on the outlook for policy.
“The Fed minutes tonight are more or less the only focus today - we're treading water ahead of it,” said Ole Hansen, senior manager at Saxo Bank.
“Our consensus is (for stimulus to be reduced by) $20 billion (a month) at the beginning of September. Any deviation from that could have an impact on the price,” he added.
The dollar index was up 0.25 percent, recovering from a two-month low on Tuesday, but remained under pressure from uncertainty in the markets.
Investor sentiment towards gold appeared more positive than earlier this year, with investors once again injecting money into gold-backed exchange-traded funds.
The SPDR Gold Trust, the world's largest gold ETF, reported inflows of 1.8 tonnes on Tuesday, the fourth daily rise in its reserves in the last two weeks. Gold ETFs recorded outflows of 402 tonnes in the first half of this year.
INDIA IMPORTS TO RESUME
Gold futures in India traded near their highest in eight months on Wednesday as the rupee weakened, but demand remained subdued ahead of the resumption of imports.
“India remains largely absent amid tighter regulations and a weak currency,” UBS said in a note. “Conversations with local participants suggest that there is good interest to re-start import activities soon, especially with authorities currently working to clarify the new rules.”
Indian traders said they will start importing gold again over the next week or so after the central bank clarified a new rule that brought the flow of the precious metal into the world's top gold consumer to a standstill at the end of July.
Demand from China and India is expected to hit 1,000 tonnes each this year, according to the World Gold Council.
Silver was last trading at $23.04 an ounce, up 0.2 percent. Platinum was up 0.2 percent at $1,512.60 an ounce, while palladium was down 0.1 percent at $746.22 an ounce.
China's silver imports fell 22.1 percent in July to 212,029 kg, official customs data showed on Wednesday, while its platinum imports rose 20 percent to 8,941 kg, with imports from South Africa, its biggest supplier, up 38 percent to 5,780 kg.
Chinese palladium imports fell 15 percent last month to 1,669 kg. -Reuters