Investing.com - Gold futures traded near the lowest level in ten months on Wednesday, 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.
On the Comex division of the New York Mercantile Exchange, 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.
Also on the Comex, silver for December delivery shed 5.9 cents to trade at $17.00 a troy ounce. Futures slumped to $16.85 on Tuesday, the lowest level since March 2010.
Later in the day, the U.S. was 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 were also looking ahead to 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.
Expectations that the Federal Reserve is growing closer to raising interest rates have boosted the dollar against the euro and the yen, as the European and Japanese central banks look likely to stick to a looser monetary policy stance.
The Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, traded at 86.21, not far from the previous session's four-year high of 86.33.
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.
Gold futures sank 6.1% last month, while silver prices tumbled 13% amid speculation that the Fed could raise interests sooner and faster than previously expected.
Gold and silver cost money to store and struggles to compete yield-bearing assets when interest rates are on the rise.
Elsewhere in metals trading, copper for December delivery tacked on 1.4 cents to trade at $3.022 a pound.
Prices fell to a five-month low of $3.000 earlier in the session after 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.