Investing.com - Gold futures maintained losses on Monday, as expectations for a September rate hike remained intact despite data showing that manufacturing activity in the Chicago-area eased slightly this month.
Gold for December delivery on the Comex division of the New York Mercantile Exchange inched down $6.20, or 0.55%, to trade at $1,127.80 a troy ounce during U.S. morning hours.
Market research group Kingsbury International said its Chicago purchasing managers’ index declined by 0.3 points to 54.4 in August from a reading of 54.7 in July. Analysts had expected the index to hold steady at 54.7 this month.
On the index, a reading above 50.0 indicates expansion, below indicates contraction.
Investors now looked ahead to Friday’s U.S. jobs report for August, which could help to provide clarity on the likelihood of a near-term interest rate hike.
The consensus forecast is that the data will show jobs growth of 220,000 last month, following an increase of 215,000 in July, while the unemployment rate is forecast to decline to 5.2% from 5.3%.
Monthly jobs gains above 200,000 are seen by economists as consistent with strong employment growth.
A strong U.S. nonfarm payrolls report was likely to add to speculation over when the Federal Reserve will begin to raise interest rates, while a weak number could undermine the argument for an early rate hike.
Gold lost 2% last week amid expectations the Federal Reserve will start raising interest rates at its next policy meeting in September.
Comments by Federal Reserve Vice Chairman Stanley Fischer over the weekend suggested that the door was still open for a rate hike at the Fed's next meeting due to take place September 16-17.
Fischer said that the case for a rate increase in September was "pretty strong", though it was still too soon to say what the central bank might do.
The timing of a Fed rate hike has been a constant source of debate in the markets in recent months.
Gold fell to a five-and-a-half year low of $1,072.30 on July 24 amid speculation the Fed will raise interest rates in September for the first time since 2006.
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 December delivery on the Comex division of the New York Mercantile Exchange slumped 3.6 cents, or 1.53%, to trade at $2.310 a pound as worries over China's slowing economy dampened demand for the red metal.
The Shanghai Composite plunged more than 4% at one point on Monday before paring losses to end down 0.8% amid reports that Beijing will scale back its market intervention efforts, which resulted in two straight days of 5% rallies in Shanghai last week.
Copper prices sank to a six-year low of $2.202 on August 24 as concerns over the health of China's economy and steep declines on Chinese stock markets dampened appetite for the red metal.
The turmoil in markets began when China unexpectedly devalued the yuan on August 11, sparking fears that the economy may be slowing at a faster than expected rate.
Market players looked ahead to a pair of manufacturing reports due out of China on Tuesday for further hints over the strength of the world's second largest economy.
The official China manufacturing purchasing managers' index was expected to fall to 49.7 in August from 50.0 in July.
Meanwhile, the final reading of the Caixin/Markit manufacturing purchasing managers’ index was forecast to inch up to 47.2 from a preliminary reading of 47.1, which was the lowest since July 2013.
A reading below 50.0 indicates industry contraction.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.