Gold futures trim gains after strong U.S. ISM report

Investing.com - Gold futures trimmed gains on Tuesday, coming off the highs of the session after data showed that manufacturing activity in the U.S. expanded at the fastest rate since April 2011 in August.

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 Federal Reserve to reduce its bond purchases.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,399.00 a troy ounce during U.S. morning hours, down 0.4%.

Gold traded in a range between USD1,384.40, the daily low and a session high of USD1,404.70 a troy ounce.

Comex floor trading was closed Monday for the Labor Day holiday, and yesterday’s transactions will be booked with today’s trades for settlement purposes.

Gold futures were likely to find support at USD1,374.10 a troy ounce, the low from September 1 and near-term resistance at USD1,411.10, the high from August 30.

Futures came off the highs after the Institute for Supply Management said its index of purchasing managers rose to a 28-month high of 55.7 in August from a reading of 55.4 in July.

Analysts had expected the ISM index of purchasing managers to inch down to 54.0 last month.

Gold traders now looked ahead to Friday’s highly-anticipated report on U.S. nonfarm payrolls, which is seen as central to the Fed’s decision on tapering.

Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would end its quantitative easing program sooner-than-expected.

Gold prices were higher earlier after Russia’s news agency said a rocket launch was detected in the Mediterranean. Israel later said it carried out a joint missile test with the U.S. in the area.

The news shifted focus back to the Middle East, where traders have been warily eyeing escalating tension between the U.S. and Syria.

Gold prices surged to a three-and-a-half month high of USD1,433.50 a troy ounce on August 28 as safe-haven buying picked up amid indications the U.S. was close to taking military action against Bashar al-Assad’s government.

But prices gave back some gains after President Barack Obama said Saturday that he will first seek approval from Congress before ordering a military strike against Syria.

A decision is not expected before September 9, when U.S. lawmakers return from their summer recess.

Elsewhere on the Comex, silver for December delivery surged 3.8% to trade at USD24.40 a troy ounce, while copper for December delivery jumped 2.1% to trade at USD3.300 a pound.

The industrial metals rallied after stronger-than-expected manufacturing data on Monday boosted the outlook for the global recovery.

Data showed that Chinese manufacturing activity expanded for the first time in a year in August, while separate reports showed that manufacturing activity in Spain and Italy returned to growth for the first time since 2011.