Gold futures re-approach 4-week high ahead of U.S. data

Investing.com - Gold prices re-approached a four-week high on Thursday, as investors looked ahead to the release of key U.S. economic data later in the day to help assess the timing for a reduction in the Federal Reserve’s bond purchasing program.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,340.70 a troy ounce during European morning trade, up 0.5%.

Prices traded in range between USD1,330.40 a troy ounce, the daily low and a session high of USD1,341.80 a troy ounce.

The December contract ended 0.64% lower on Wednesday to settle at USD1,334.00 a troy ounce.

Gold futures were likely to find support at USD1,310.10 a troy ounce, the low from October 22 and resistance at USD1,350.30, the high from September 29.

The U.S. dollar came under broad selling pressure as expectations grew that the Fed would postpone plans to start scaling back its asset purchase program well into next year.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, declined 0.15% to trade at 79.22, the weakest level since February 1.

Dollar weakness usually benefits gold, as it boosts the metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.

The U.S. was to produce data on initial jobless claims and new home sales later Thursday.

Official data released earlier in the week showed that the U.S. economy added 148,000 jobs in September, well below expectations for an increase of 180,000.

The unemployment rate ticked down to a four-and-a-half year low of 7.2% from 7.3% in August, but this was partially due to more people dropping out of the labor force.

Gold traders have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Fed to start reducing stimulus.

Gold prices have largely tracked shifting expectations as to whether the Fed would start tapering its USD85-billion-a-month asset-purchase program by the end of the year.

The central bank is scheduled to meet October 29-30 to review the economy and assess policy.

Elsewhere on the Comex, silver for December delivery added 0.25% to trade at USD22.68 a troy ounce, while copper for December delivery was little changed to trade at USD3.269 a pound.

A strong initial economic indicator for China failed to offset pessimism over its economy.

China’s HSBC manufacturing index for October rose to a seven-month high of 50.9, up from a final reading of 50.2 in September. Economists had expected the index to tick up to 50.5.

However, sentiment remained weak amid concerns over a cash crunch in the Chinese financial system after interbank lending rates moved higher for a second day.