On Wednesday gold futures traded near the lowest level in ten months, as market players looked ahead to the release of key U.S. data later in the session for further indications on the strength of the economy and the future path of monetary policy.
Comex gold for December delivery traded at $1,206.60 a troy ounce during European morning hours, down $5.00 from a closing price of $1,211.60 on Tuesday. Gold prices hit $1,204.30 on Tuesday, a level not seen since January 2.
Futures were likely to find support at $1,199.80, the low from December 24 and resistance at $1,220.70, the high from September 30.
Comex Silver for December delivery shed 5.9 cents to trade at $17.00 a troy ounce. Futures plunged to $16.85 on Tuesday, the lowest level since March 2010.
Today, the U.S. is to release the ADP report on private sector job creation, as well as a report by the Institute of Supply Management on manufacturing activity.
Investors are also awaiting the latest U.S. employment report, due for release on Friday, for further indications on the strength of the recovery in the labor market, a key factor in deciding the future path of monetary policy.
The dollar boosted against the euro and the yen on expectations that the Federal Reserve is coming closer to raising interest rates, while the European and Japanese central banks look likely to stick to a looser monetary policy stance.
A stronger U.S. dollar usually pressures gold, as it undermines the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Gold futures sank 6.1% last month, while silver prices plunged 13% amid speculation that the Fed could raise interests sooner and faster than previously expected.
Elsewhere in metals trading, copper for December delivery tacked on 1.4 cents to trade at $3.022 a pound.
The fall of prices to a five-month low of $3.000 earlier in the session was caused by data showed that factory growth in China held up last month but remained subdued, indicating a recovery in the broader economy remains fragile.
China’s official manufacturing index held steady at 51.1 in September, unchanged from August and broadly in line with market expectations.
China is the world's largest copper consumer, accounting for nearly 40% of global demand.
The industrial metal lost 4.8% in September amid indications China's economy is losing momentum and as a broadly stronger U.S. dollar dampened the appeal of dollar-denominated commodities.
