Gold futures are trading higher on Tuesday, breaking out over a short-term resistance area and hitting a three-week high in the process. Gains are being fueled by a weaker U.S. Dollar as investors position themselves ahead of Wednesday’s minutes from the U.S. Federal Reserve’s June meeting that could provide clarity on monetary policy.

At 11:18 GMT, August Comex gold is trading $1808.20, up $24.90 or +1.40%.

The Dollar is edging lower for a third session on Tuesday as investors continue to react to last Friday’s U.S. June jobs report that showed a beat by the headline number, but a slight increase in the unemployment rate. The mixed results suggests the Federal Reserve can wait before tapering asset buying or hiking rates. Government yields fell on the news, making the U.S. Dollar a less-attractive investment while driving up demand for dollar-denominated gold.

In other news, the Reserve Bank of Australia (RBA) remained dovish when it left its cash rate at a record low of 0.1% and said it was likely to remain there until 2024 although it did pare back its bond-buying campaign.

Focus on Fed Minutes

The central focus of the week will be on the minutes from the Federal Open Market Committee’s (FOMC) June meeting. These are set to help give traders a better sense of when Fed officials might begin tapering their crisis-era asset purchase program and raising benchmark interest rates from their current near-zero levels, according to Emily McCormick at Yahoo Finance.

The Fed’s June meeting several weeks ago marked a notable shift in the Fed’s outlook, with the central bank’s updated Summary of Economic projections reflecting both increased GDP and inflation expectations and the possibility of two rate hikes by the end of 2023. In his press conference following the June meeting, Fed Chair Jerome Powell also said it was time to “retire” the notion of “talking about talking about tapering,” since the central bank had in fact begun to contemplate the timing of such a move.

Story continuesDaily Forecast

If the short-covering continues to generate enough upside momentum then look for the current rally to possibly extend into $1834.70 to $1854.60.

Bank of America economist Michelle Meyer said, three themes will be in focus when reviewing the Fed’s forthcoming meeting minutes:  the path for tapering, the Fed’s level of concern around persistent inflation, and the central bank’s views on the recovery in the employment-to-population ratio.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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