Gold prices drifted lower in Asia on Tuesday with central bank meetings in the U.S. and Japan this week in focus and investors largely on the sidelines ahead of the policy reviews. On the Comex division of the New York Mercantile Exchange, gold for June delivery eased 0.08% to $1,239.40 a troy ounce. Silver futures for May delivery gained 0.06% to $17.020 a troy ounce, while copper for May delivery fell 0.04% to $2.253 a pound. Overnight, gold rallied sharply on Monday, amid a broadly weaker dollar, as the precious metal erased some of its losses from a massive sell-off late last week ahead of the start of the Federal Open Market Committee's two-day April meeting. Investors continue to await Wednesday's interest rate decision by the Federal Reserve, its third since a historic rate hike in December when the U.S. central bank halted a seven-year zero interest rate policy by raising short-term rates for the first time in nearly a decade. The Fed has responded by holding its benchmark Federal Funds Rate at its current level between 0.25 and 0.50% in each of its first two meetings this year. In March, the FOMC voted 9-1 to leave the Fed Funds Rate unchanged, with Kansas City Fed president Esther George serving as the lone dissenter. While the FOMC is not expected to lift short-term rates at this week's meeting, the Fed could provide hints on the timing of further tightening of its monetary policy cycle. Gold has extended gains in recent weeks in the wake of dovish comments from Fed chair Janet Yellen on the likelihood that the central bank will remain cautious on raising rates in the near future, amid strong headwinds from global financial markets. Many economic analysts believe that it is more likely that the FOMC could lift interest rates at its next meeting in June. On Monday, the CME Group's (NASDAQ:NASDAQ:CME) Fed Watch tool placed the probability of a June rate hike at 22.5%, up from 15.8% one month earlier. At the same time, the CME Group says there is only a 2.3% chance for a rate hike by the Fed this week, still above last month's probability of 1.2%. Any rate hikes by the Fed this year are viewed as bearish for gold, which struggles to compete with high yield bearing assets in rising rate environments. Elsewhere, new home sales in the U.S. increased by 511,000 in March, building off robust upwardly revised gains of 519,000 from the previous month. Analysts expected to see gains of 522,000 on the month. The losses were concentrated in the Western region, where sales plunged by 23.6%.
