Gold price relatively flat, as monumental Fed meeting remains in focus

New York (Dec 8)  Gold futures were relatively flat on Tuesday lingering near six-year lows, as investors remained focused on next week's critical Federal Reserve meeting where the U.S. central bank is expected to raise short-term interest rates for the first time in nearly a decade.

On the Comex division of the New York Mercantile Exchange, gold for February delivery traded between $1,065.80 and $1,078.20 an ounce before settling at $1,073.60, down 1.50 or 0.14% on the session. Last week, gold futures dipped below $1,050 to fall to its lowest level since the height of the Financial Crisis. During a volatile, temperamental last month of trading, the precious metal has lost approximately 1% in value. Gold is still far below its high from October when it peaked at above $1,185 an ounce.

Gold likely gained support at $1,046.20, the low from December 3 and was met with resistance at $1,110.70, the high from Dec. 5.

Metal traders will likely partake in cautious trading over the next week until the Federal Open Market Committee issues a highly-anticipated monetary policy statement following its two day meeting on Dec. 15-16. A host of influential policymakers, including Fed chair Janet Yellen have sent strong indications that it will abandon its current zero-interest rate policy for the first time in almost seven years at next week's meeting.

The Federal Funds Rate, the FOMC's benchmark rate, has remained between zero and 0.25% at every Fed meeting dating back to December, 2008, months after the outbreak of the Financial Crisis. The FOMC has also not approved a rate hike for more than nine years since its met in June, 2006. Any rate hike from the FOMC is expected to be modest, likely just 0.25%, before the Fed engages in a gradual tightening cycle over the next several years.

While Yellen has been pleased with the moderate growth exhibited by the U.S. economy this year, she continues to bemoan the slow pace of inflation that remains considerably below the Fed's long-term targeted goal of 2%. Yellen, along with several colleagues, believe that the transitory factory dragging down inflation will recede once the dollar stabilizes and the price of crude oil recovers. The dollar has appreciated by more than 10% in 2015 and is currently being traded near a one-year high. Crude futures, meanwhile, have crashed more than 80% over the last 18 months amid a glut of supply on global energy markets. A rate hike is viewed as bearish for gold, which struggles to compete with high-yield bearing assets.

Elsewhere, markets reacted to subdued China trade data after its exports in November plunged 6.8%, marking the fifth straight month of declines. At the same time, imports fell 8.7% extending a lengthy slump that has persisted throughout the year. Domestic demand in China is a key driver for global commodity prices.

China is the world's largest producer of gold and the world's second-largest consumer of the precious metal behind India.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell mildly to an intraday low of 98.36. Last week, the index reached a 2015-high at 100.55, before crashing more than 2.35% on Thursday when European Central Bank president Mario Draghi spooked global foreign markets by instituting limited easing measures at a meeting in Frankfurt. Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.

Silver for March delivery fell 0.177 or 1.30% to close at $14.155 an ounce.

Copper for March delivery added 0.003 or 0.16% to 2.055 a pound.