Gold stuck in a range as spotlight shifts to U.S. jobs data

(Reuters) – Gold prices eased in a tight range on Tuesday as investors squared positions before U.S. jobs data later this week that could shed more light on labour market health and potentially influence the Federal Reserve’s tapering timeline.

FILE PHOTO: Gold bars are displayed at a gold jewelry shop in the northern Indian city of Chandigarh November 4, 2009. REUTERS/Ajay Verma/File Photo

Spot gold was down 0.2% to $1,810.46 per ounce by 1131 GMT, while U.S. gold futures fell 0.5% to $1,812.70.

“Gold has lost its momentum” and is really struggling to find direction out of different developments, said Saxo Bank analyst Ole Hansen.

“If gold breaks above $1,835 level, we could see some additional buying momentum come back into the market. But until that, we need to be bit more cautious on the short term direction here,” Hansen added.

Data on Monday showed U.S. manufacturing activity grew at a slower pace in July for the second straight month, pressuring the dollar and U.S. Treasury yields.

Investors now await July’s U.S. non-farm payroll numbers, due on Friday, following dovish commentary from Fed Chief Jerome Powell last week.

Fed Governor Christopher Waller said the central bank could start to reduce its support by October if the next two monthly jobs reports each show employment rising by 800,000 to 1 million, as he expects.

Gold’s ascent has been limited by the looming prospects of the Fed’s tapering, Han Tan, chief market analyst at Exinity said.

A Fed rate increase will dull gold’s appeal as it translates into a higher opportunity cost of holding the non-yielding precious metal.

Meanwhile, China’s first-half gold output fell 10.18% to 152.75 tonnes, but gold demand for the same period picked up from a relatively low base a year earlier, the China Gold Association said.

Elsewhere, silver was steady at $25.44 per ounce, platinum edged higher by 0.1% to $1,056.27, and palladium rose 0.8% to $2,696.04.

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