Investing.com - Gold futures struggled for direction in European trade on Wednesday, after posting solid overnight gains as market players looked ahead to key U.S. data later in the day for more clues on the Federal Reserve’s next move.
The U.S. Institute of Supply Management is to release data on May manufacturing activity at 14:00GMT, or 10:00AM ET. The gauge is expected to inch down 0.3 points to 50.5. Anything above 50.0 signals expansion.
Other data scheduled for release Wednesday include May auto sales, April construction spending and the Fed's Beige Book.
Solid readings could further heighten expectations for a move as soon as the Federal Reserve's next policy meeting on June 14-15.
Gold for June delivery on the Comex division of the New York Mercantile Exchange inched up 75 cents, or 0.06%, to trade at $1,218.25 by 06:48GMT, or 2:48AM ET.
A day earlier, gold inched up 80 cents, or 0.07%, as investors digested a mixed bag of U.S. economic data.
Reports showed that U.S. consumer spending recorded its biggest increase in more than six years in April but consumer confidence deteriorated and survey on business activity in U.S. Midwest also disappointed.
Market expectations for a June hike dipped to a 23% probability from around 28% a day earlier, while the chance of a July hike held around 60%, according to CME Group's (NASDAQ:CME) FedWatch tool. September odds were at about 62%.
The U.S. dollar pulled back slightly but remained within striking distance of a more than two-month high against a basket of major currencies as investors bet that the Fed was on track to raise rates sooner rather than later.
Gold futures are up nearly 15% so far this year, but the yellow metal has been under pressure since the release of the minutes from the Fed's April meeting boosted expectations of a summer rate hike.
Gold is sensitive to moves in U.S. rates, as a rise would lift the opportunity cost of holding non-yielding assets such as bullion.
Elsewhere on the Comex, silver futures for July delivery inched up 4.6 cents, or 0.29%, to trade at $16.04 a troy ounce during morning hours in London, while copper futures declined 3.0 cents, or 1.41%, to $2.066 a pound.
Weak Chinese manufacturing activity data released earlier underlined concerns over the health of the world’s second largest economy.
The official China manufacturing purchasing managers' index came in at 50.1 in May, unchanged from a month earlier. Meanwhile, the Caixin manufacturing purchasing managers’ index fell to 49.2 last month, contracting for the 15th straight month.
The disappointing data reinforced the view that the economy remains in the midst of a gradual slowdown which will require Beijing to roll out more support in coming months.
The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.