Investing.com -- Gold futures were relatively flat on Wednesday paring earlier gains in overnight Asian trading, as manufacturing activity in both China and the U.S. fell to its lowest level in years.
Investors also awaited for a flurry of potential market-moving comments from members of the Federal Reserve, including chair Janet Yellen on Wednesday, for further indications on whether the U.S. central bank could raise short-term interest rates later this month. A rate hike is viewed as bearish for gold, which is not attached to interest rates and struggles to compete with high-yield bearing assets.
On the Comex division of the New York Mercantile Exchange, gold for February delivery wavered between $1,062.60 and $1,074 an ounce before settling at $1,064.30, down 1.00 or 0.09% on the session. Gold is coming off a dreadful month when it tumbled more than 8%, amid mounting expectations for the Fed's first rate hike in nearly a decade. Last week, the precious metal continued its extended slump when it plunged to fresh six-year lows around $1,050 an ounce.
On Tuesday, gold likely gained support at $1,051.10, the low from November 27 and was met with resistance at 1,092.40, the high from Nov. 16.
Gold futures retreated from session-highs in the overnight session after China's National Bureau of Statistics reported that manufacturing conditions nationwide slipped to its weakest level in three years. In November, China's official PMI fell to 49.6 as output, new orders, inventories and employment levels remained weak across the board. Analysts expected a median reading of 49.8 for the month. Separately, the Caixin Manufacturing PMI, rose slightly to 48.6 above expectations for a reading of 48.3. Any reading below 50 provides indications of contraction in the sector.
China is the world's largest producer of gold and the second-largest consumer of the precious metal.
In the U.S., the picture was as grim as national factory activity contracted at its fastest pace in more than six years. In a monthly report, the Institute for Supply Management (ISM) said national factory activity fell to 48.6 in November, dropping below 50 for the first time since November, 2012. New orders fell sharply by four points from 52.9 to 48.9, its lowest level in more than three years.
The Federal Open Market Committee is keeping a close eye on global economic data over the next few weeks before its critical monetary policy meeting on Dec. 15-16.
Two members, Federal Reserve Bank of Chicago president Charles Evans and governor Lael Brainard are scheduled to speak on Tuesday before Yellen makes two appearances in Washington on Wednesday. The comments from the FOMC members will come ahead of the European Central Bank's meeting on Thursday when its Governing Council is expected to approve a wide range of easing measures, including increasing the scope of its comprehensive bond buying program.
The expectation for diverging monetary policies from the Fed and the ECB sent the dollar soaring above 100.35 on Monday, mere percentage points from a 12-month high. While the U.S. Dollar Index slipped back into double digits on Tuesday morning, the index still remained near its highest level since mid-April. The index measures the strength of the greenback versus a basket of six other major currencies.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for December delivery fell 0.001 or 0.01% to 14.085 an ounce.
Copper for March delivery gained 0.023 or 1.11% to 2.071 a pound.