Investing.com - Gold futures held steady during European morning hours on Monday, as investors booked profits following Friday’s 4% rally, though further upside was seen amid growing speculation for more monetary easing from the Federal Reserve after Friday’s surprisingly weak U.S. jobs data.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,621.45 a troy ounce during early European trade, dipping 0.05%.
The August contract traded in between a tight range of USD1,629.55 a troy ounce, the daily high and a session low of USD1,616.35. Prices touched USD1,631.25 on Friday, the highest since May 8.
Gold futures were likely to find support at USD1,532.55 a troy ounce, the low from May 30 and near-term resistance at USD1,639.05, the high from May 8.
Gold prices scored their largest one-day gain in more than three-years on Friday, surging 4% after the Department of Labor said that the U.S. economy added just 69,000 jobs in May, the smallest increase in a year and far below expectations for a gain of 150,000.
The unemployment rate unexpectedly ticked up to 8.2% from 8.1%, the first increase in 11 months.
The number of new jobs created in April was slashed to 77,000 from an original estimate of 115,000, while job growth in March was revised down to 143,000 from a previously reported 154,000.
The weak data added to concerns that the economic recovery in the U.S. is losing momentum, which could lead to a third round of quantitative easing from the U.S. central bank.
Gold investors will be closely watching U.S. data in the second quarter for clues as to the likelihood of a fresh round of monetary easing, which could potentially hurt the dollar and support gold.
Vincent Reinhart, Morgan Stanley's chief U.S. economist and a former Federal Reserve official, said Friday that there is an 80% chance that a new quantitative easing program is announced at the June 19-20 Fed meeting.
"Slower employment growth, worsening strains in European markets, and a gloomier assessment of US politicians’ ability to steer clear of the impending fiscal cliff makes it likely that the Fed will mark down its already tepid forecast," he wrote in a note to clients Friday.
QE has been a key driver in gold’s bull run, as it keeps interest rates and borrowing costs low, which makes gold more attractive compared with yield- or dividend-bearing assets such as bonds or stocks.
Gold gained as much as 15% earlier this year to hit USD1,790 an ounce after the Fed said in January it would keep interest rates near zero until at least late 2014 and indicated that it could introduce a fresh round of asset-purchases.
However, prices have lost almost 9% since late February, amid growing concerns the European debt crisis has been escalating, which has fueled demand for the yellow metal's hedge, the greenback.
Gold's gains Friday could also be a sign of renewed safe-haven demand, according to market analysts. Gold has recently lost its safe haven appeal to the U.S. dollar, U.S. Treasuries and German Bunds.
Meanwhile, investors continued to monitor developments surrounding Spain’s deteriorating financial situation as well as fears over a potential Greek exit from the euro zone.
Elsewhere on the Comex, silver for July delivery fell 0.65% to trade at USD28.32 a troy ounce, while copper for July delivery tumbled 1.9% to trade at USD3.251 a pound.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,621.45 a troy ounce during early European trade, dipping 0.05%.
The August contract traded in between a tight range of USD1,629.55 a troy ounce, the daily high and a session low of USD1,616.35. Prices touched USD1,631.25 on Friday, the highest since May 8.
Gold futures were likely to find support at USD1,532.55 a troy ounce, the low from May 30 and near-term resistance at USD1,639.05, the high from May 8.
Gold prices scored their largest one-day gain in more than three-years on Friday, surging 4% after the Department of Labor said that the U.S. economy added just 69,000 jobs in May, the smallest increase in a year and far below expectations for a gain of 150,000.
The unemployment rate unexpectedly ticked up to 8.2% from 8.1%, the first increase in 11 months.
The number of new jobs created in April was slashed to 77,000 from an original estimate of 115,000, while job growth in March was revised down to 143,000 from a previously reported 154,000.
The weak data added to concerns that the economic recovery in the U.S. is losing momentum, which could lead to a third round of quantitative easing from the U.S. central bank.
Gold investors will be closely watching U.S. data in the second quarter for clues as to the likelihood of a fresh round of monetary easing, which could potentially hurt the dollar and support gold.
Vincent Reinhart, Morgan Stanley's chief U.S. economist and a former Federal Reserve official, said Friday that there is an 80% chance that a new quantitative easing program is announced at the June 19-20 Fed meeting.
"Slower employment growth, worsening strains in European markets, and a gloomier assessment of US politicians’ ability to steer clear of the impending fiscal cliff makes it likely that the Fed will mark down its already tepid forecast," he wrote in a note to clients Friday.
QE has been a key driver in gold’s bull run, as it keeps interest rates and borrowing costs low, which makes gold more attractive compared with yield- or dividend-bearing assets such as bonds or stocks.
Gold gained as much as 15% earlier this year to hit USD1,790 an ounce after the Fed said in January it would keep interest rates near zero until at least late 2014 and indicated that it could introduce a fresh round of asset-purchases.
However, prices have lost almost 9% since late February, amid growing concerns the European debt crisis has been escalating, which has fueled demand for the yellow metal's hedge, the greenback.
Gold's gains Friday could also be a sign of renewed safe-haven demand, according to market analysts. Gold has recently lost its safe haven appeal to the U.S. dollar, U.S. Treasuries and German Bunds.
Meanwhile, investors continued to monitor developments surrounding Spain’s deteriorating financial situation as well as fears over a potential Greek exit from the euro zone.
Elsewhere on the Comex, silver for July delivery fell 0.65% to trade at USD28.32 a troy ounce, while copper for July delivery tumbled 1.9% to trade at USD3.251 a pound.