Investing.com -- Gold futures fell mildly on Wednesday amid a sharply higher dollar, as investors await a key meeting of European policymakers and critical U.S. employment data later this week for further indications on the direction of global interest rates.
On the Comex division of the New York Mercantile Exchange, gold for December delivery traded in a tight range between $1,131.50 and $1,141.90 an ounce before settling at $1,134.60, down 5.20 or 0.46% on the session. Since peaking above $1,165 an ounce earlier last month, gold has now closed lower in seven of the last nine sessions. Still, the precious metal has increased in value by more than 3.5% over the last month of trading.
Gold likely gained support at $1,119.60, the low from August 26 and was met with resistance at 1,166.50, the high from Aug. 21.
A number of metal traders were hesitant to make any major moves during Wednesday's session ahead of a meeting of the European Central Bank's Governing Council on Thursday afternoon. Investors could be looking from signals from ECB head Mario Draghi on the viability of the bank's €60 billion a month quantitative easing program, which was launched in March. Previously, the ECB was on course to extend the bond-buying program through September, 2016 before a wave of economic shocks in China and soft commodity prices rattled global markets in recent weeks.
In August, inflation in the euro zone inched up by only 0.2% on a yearly basis, far below the ECB's targeted goal of 2%. During its last long-term estimate in June, the ECB forecasted inflation to reach 1.8% in 2017. If the ECB signals that it could continue the bond-buying initiative beyond next September, it might provide indications that it expects inflation to remain lower over the next several years.
Gold is viewed as a safe haven for investors in periods of severe economic instability.
In the U.S., analysts are bracing for a relatively weak U.S. jobs report for the month of August after forecasts from the ADP Research Institute fell sharply below consensus estimates on Wednesday. In its National Employment Report, ADP estimated that U.S. non-farm payrolls increased by 190,000 in August, significantly under estimates of a 210,000 gain. The U.S. Bureau of Labor Statistics will release the August jobs report on Friday morning.
In July, U.S. private payrolls increased by 215,000 as the unemployment rate remained steady at 5.3%. A soft reading on Friday could convince the Federal Reserve to delay a potential interest rate hike beyond September.
Gold, which is not attached to interest rates or dividends, struggles to compete with high-yield bearing assets in rising rate environments.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, surged more than 0.45% to an intraday high of 95.94. The index is still down by more than 1.5% over the last month.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for December delivery gained 0.080 or 0.55% to 14.700 an ounce.
Copper for December delivery rose 0.026 or 1.15% to 2.328 a pound.