Investing.com - Gold prices steadied above the prior session's two-month low during European hours on Thursday, as investors looked ahead to data on U.S. nonfarm payrolls on Friday to give the market direction.
The consensus forecast is that the data will show jobs growth of 180,000 in August, following an increase of 255,000 in the preceding month.
A strong nonfarm payrolls report would reinforce the view that a U.S. rate increase in September may be on the cards, after hawkish signals from senior Fed officials in recent days revived speculation of a near-term rate hike.
Ahead of the employment data, markets will digest reports on initial jobless claims and nonfarm productivity, both due at 8:30AM ET (12:30GMT) later Thursday. There is also Markit manufacturing PMI data at 9:45AM ET (13:45GMT) and ISM manufacturing at 10:00AM ET (14:00GMT), as well as a report on construction spending.
Gold for December delivery on the Comex division of the New York Mercantile Exchange dipped $1.10, or 0.08%, to trade at $1,310.30 a troy ounce by 3:07AM ET (07:07GMT).
A day earlier, prices fell to as low as $1,306.90, a level not seen since June 24, after upbeat private sector U.S. employment data added to speculation that the Federal Reserve is gearing up to hike interest rates at its September meeting.
According to Investing.com's Fed Rate Monitor Tool, investors are pricing in a 27% chance of a rate hike by September. December odds were at around 59%.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 96.05 early Thursday, after rising to 96.25 overnight, its highest since August 9.
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.
Also on the Comex, silver futures for December delivery tacked on 6.0 cents, or 0.32%, to trade at $18.76 a troy ounce during morning hours in London, while copper futures gained 1.1 cents, or 0.55%, to $2.089 a pound.
Investors digested a pair of Chinese manufacturing reports released earlier in the session, which painted a mixed picture of the health of the country's manufacturing sector.
The official China manufacturing purchasing managers' index swung back to expansion territory in August, rising to 50.4 from 49.9 a month earlier.
A separate private survey of small-to-medium sized companies, however, revealed operating conditions in the sector stagnated.
The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.