Gold futures erase losses, turns flat after ADP miss

Investing.com - Gold prices erased losses to trade flat on Wednesday, after data showed that U.S. non-farm private employment rose less than expected in April, fuelling concerns over the strength of the U.S. labor market.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery tacked on 50 cents, or 0.04%, to trade at $1,193.90 a troy ounce during U.S. morning hours. Prices traded in a range between $1,187.50 and $1,196.80.

A day earlier, gold rose $6.40, or 0.54%, to close at $1,193.20. Futures were likely to find support at $1,168.40, the low from May 1, and resistance at $1,207.40, the high from April 30.

Payroll processing firm ADP said non-farm private employment rose by 169,000 last month, below expectations for an increase of 200,000. The economy created 175,000 jobs in March, whose figure was downwardly revised from a previously reported increase of 189,000.

The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.7% to 94.60 after the disappointing jobs data.

Dollar weakness usually benefits gold, as it boosts the metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.

Investors now turned their attention to Friday’s U.S. employment report for April for further clues on when the Federal Reserve may raise interest rates.

A strong U.S. nonfarm payrolls report was likely to bring forward expectations on when the central bank will begin to hike rates, while a weak number could weigh on the dollar by undermining the argument for an early rate increase.

A recent run of disappointing U.S. economic data dampened optimism over the recovery, fuelling speculation the Fed could delay hiking interest rates until late 2015, instead of tightening midyear.

But the Fed said in its rate statement last week that recent indications of a slowdown in growth were probably due to “transitory factors.”

Also on the Comex, silver futures for July delivery shed 1.1 cents, or 0.07%, to trade at $16.56 a troy ounce. On Tuesday, silver jumped 13.8 cents, or 0.84, to end at $16.57.

Elsewhere in metals trading, copper for July delivery inched down 0.6 cents, or 0.22%, to trade at $2.929 a pound.

Copper rallied to $2.956 on Tuesday, the strongest level since November 28, before settling at $2.935, up 1.4 cents, or 0.5%, amid mounting speculation policymakers in China will have to introduce further stimulus measures to jumpstart the economy amid lackluster growth.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption.