Investing.com - Gold prices rose above the $1,200-level on Wednesday, as investors shrugged off a stronger dollar while awaiting key U.S. data later in the session which could provide further clues on the future path of interest rates.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery tacked on $5.20, or 0.43%, to trade at $1,204.60 a troy ounce during European morning hours.
A day earlier, Comex gold prices lost $18.70, or 1.54%, to settle at $1,199.40 an ounce. Prices hit $1,141.70 on December 1 after Swiss voters rejected a proposal requiring the Swiss central bank to boost its gold reserves.
Futures were likely to find support at $1,141.70, the low from December 1, and resistance at $1,221.00, the high from December 1.
Also on the Comex, silver futures for March delivery inched up 1.2 cents, or 0.07%, to trade at $16.46 a troy ounce. Prices hit $14.42 on December 1, a level not seen since August 2009.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, was at 88.76, the strongest level since May 2010.
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.
The euro remained under pressure as investors awaited Thursday’s outcome of the European Central Bank’s monthly policy meeting, amid heightened expectations for additional measures to spur growth and inflation in the faltering euro area economy.
Later in the day, the U.S. was to release the ADP report on private sector job creation, while the ISM was to publish a report on U.S. service sector activity.
Gold prices are likely to remain vulnerable in the near-term amid indications a strengthening U.S. economic recovery will force the Federal Reserve to start raising interest rates sooner and faster than previously thought.
Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.
Elsewhere in metals trading, copper for March delivery slumped 1.8 cents, or 0.62%, to trade at $2.874 a pound, amid ongoing concerns over the health of China's economy.
A pair of reports on Chinese November factory activity released earlier in the week provided more evidence of a slowdown in the world's second largest economy.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.