Investing.com - Gold futures held steady in cautious trade on Thursday, as investors looked ahead to the European Central Bank's policy decision later in the day while awaiting further indications on the strength of the U.S. economy.
On the Comex division of the New York Mercantile Exchange, gold for December delivery eased up 0.02%, or 20 cents, to trade at $1,270.50 a troy ounce during European morning hours.
Prices held in a narrow range between $1,269.00 and $1,274.20 an ounce. Futures were likely to find support at $1,261.90, the low from September 3 and resistance at $1,290.90, the high from September 2.
A day earlier, gold fell to a two-and-a-half month low of $1,261.90 before turning higher to settle at $1,270.30, up $5.30, or 0.42% amid confusion over whether Ukraine and Russia had reached a ceasefire agreement in eastern Ukraine.
Ukraine's President Petro Poroshenko said he had agreed on a "permanent ceasefire" in eastern Ukraine with Russian President Vladimir Putin.
However, a spokesman for President Putin subsequently said he had not agreed to a ceasefire as Russia was not party to the conflict.
Focus now turns to the European Central Bank's policy meeting later in the day, amid speculation the central bank could unveil fresh stimulus measures to fight inflation and boost growth.
Market players are hoping the meeting will shed further light on the bank's plans to start asset purchases, a move that would work in favor of the dollar's strength.
The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, hit a 13-month high of 83.07 on Wednesday.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Meanwhile, investors also looked ahead to Friday’s U.S. employment report for August for further indications on the strength of the recovery in the labor market, a key factor in deciding the future path of monetary policy.
While the U.S. economy continues to gain steam, Federal Reserve Chair Janet Yellen has expressed concern over slackness persistent in the labor market.
On Thursday, the U.S. is to release trade-balance data, the ADP report on private-sector job creation and the weekly report on initial jobless claims. Also on Thursday, the ISM is to publish a report on U.S. service sector activity.
A recent batch of upbeat data underlined optimism over the strength of the economy and fuelled expectations that the Fed will begin to raise rates sooner than previously thought.
Also on the Comex, silver for December delivery tacked on 0.1%, or 1.9 cents, to trade at $19.20 a troy ounce.
Elsewhere in metals trading, copper for December delivery inched up 0.37%, or 1.1 cents, to trade at $3.139 a pound.