Gold futures were higher Wednesday before the release of an employment indicator likely to further discussion about the future of the Federal Reserve’s bond-buying program and the impact on the metals market.
Gold for August delivery rose $7.60, or 0.5%, to $1,404.50 an ounce in electronic trade.
The move won back a portion of Tuesday’s loss of $14.70, or 1%, on the Comex division of the New York Mercantile Exchange when a rise in the U.S. dollar curbed the dollar-denominated metal’s appeal.
Investors on Tuesday also reacted to a decision by India’s central bank to extend gold import restrictions to designated agencies and trading houses in a bid to reduce the country’s current account deficit.
Later Wednesday, gold prices may be pushed up further or yanked lower following a report on private-sector jobs growth for May from Automatic Data Processing Inc. Investors read the ADP figures for any insight on what the U.S. government’s monthly payroll report — due Friday — may say.
After a better-than-expected nonfarm payroll report in April, there was a pick up in speculation that the Federal Reserve will prepare to slow the pace of bond purchases from $85 billion a month, aimed at bolstering economic growth. The Fed’s quantitative easing program has helped support gold as it tends to pressure the dollar and can lead to inflation. Gold is often seen as a hedge against inflation.
But late last week, economic guru Nouriel Roubini, in making a six-point case that gold is headed to trade below $1,000 an ounce by 2015, noted that even after aggressive monetary policy by central banks, global inflation is low and dropping further.
The ADP data is due at 8:15 a.m Eastern. Also on tap Wednesday is the Fed’s Beige Book of anecdotes about the economy, and a report on U.S. factory orders in April, among other data.
Meanwhile, July copper prices slipped 1 cent, or 0.4%, to $3.35 a pound. Copper prices hit a nearly two-week high on Tuesday following news that a mine ran by Freeport-McMoRan Copper & Gold Inc. in Indonesia may be closed for up to three months following two separate and fatal accidents.
“Negative flow of macroeconomic data has had limited impact on the price recently. And as we move into a period of seasonally strong demand for copper amid short-term supply constraints, prices could find further buying support,” Rivkin global analyst Tim Radford to clients about copper on Tuesday.
July silver was up 16 cents, or 0.7%, to $22.56 an ounce.
July platinum rose $6.90, or 0.5%, to $1,498 an ounce. and September palladium fell $5.15, or 0.7%, to $756.20 an ounce.