Investing.com -- Gold futures fell slightly on Wednesday ending a two-day rally, as disappointing U.S. jobs forecasts painted a bleak outlook for Friday's critical nonfarm payroll employment report.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery fell 3.80 or 0.32% to 1,189.40. Gold rose to a session-high of 1,196.90 following the jobs release in U.S. morning trading before falling to a daily-low of 1,187.50. Since the start of April, gold futures have remained in a range of $1,170 at the low end and $1,215 at its peak.
On Wednesday, payroll processing firm Automatic Data Processing Inc. (NASDAQ:ADP) said in a monthly report that private payrolls increased by 169,000 nationwide for the month of April. The forecasts are just below the low end of consensus estimates at 170,000 and significantly below high estimates of a 205,000 gain. ADP also revised private payrolls for March downward by 14,000 to 175,000.
In March, nonfarm payrolls increased modestly by 126,000 on a month to month basis falling precipitously from a 264,000 gain a month earlier. The unemployment rate in March remained unchanged at 5.5%, while the labor force participation rate ticked down 0.1% to 62.7%. Average hourly earnings, meanwhile, increased by 0.3%, up from a 0.1% gain in February.
The Federal Reserve will keep a close eye on Friday's job report, as it takes a data-driven approach to the timing of its first interest rate hike in nearly a decade. Any significant improvements in the labor market could convince the hawks on the Federal Open Market Committee to push for lift-off in June. By the same token, another month of modest job gains could persuade the Fed to delay a rate hike to September or possibly even December.
Metal traders appears hesitant to make any drastic moves in either direction before Friday's release.
Gold, which is unattached to dividends or interest rates, struggles to compete with high yield-bearing assets in high interest rate environments.
Also on Wednesday, Fed chair Janet Yellen warned of the potential dangers from high stock valuations in an appearance with International Monetary Fund head Christine Lagarde at the Institute for New Economic Thinking in Washington. Responding to a question from Lagarde at the institute's Finance and Society Conference, Yellen indicated that while the Fed is somewhat concerned about financial stability in the equity markets, it is not worried about potential bubbles forming. "I would highlight that equity market valuations at this point generally are quite high," Yellen said. "There are potential dangers there."
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, plunged 1.34% to 93.99, the lowest level since late-February before slightly rebounding to 94.36.
Elsewhere, silver for July delivery fell 0.096 or 0.58% to 16.483 a troy ounce.
Copper for July delivery dropped 0.020 or 0.67% to 2.915 a pound, one day after reaching a yearly-high.