Investing.com - Gold prices moved higher in U.S. trading on Wednesday as investors digested hit-or-miss economic indicators that left markets in doubt as to how quickly the Federal Reserve will taper its monthly bond-buying program.
Fed stimulus tools such as bond purchases tend to weaken the dollar by suppressing interest rates, thus bolstering the yellow metal''s appeal as a hedge.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,256.70 a troy ounce during U.S. trading, up 0.44%, up from a session low of USD1,252.40 and off a high of 1,274.10.
The April contract settled down 0.69% at USD1,251.20 on Tuesday.
Futures were likely to find support at USD1,240.60 a troy ounce, Monday''s low, and resistance at USD1,279.20, the high from Jan. 26.
Earlier Wednesday, the Institute for Supply Management reported that its services purchasing managers’ index came in at 54.0 in January, up from 53.0 in December.
Analysts had expected the index to rise to 53.7.
The employment component of the index rose to its highest level since November 2010.
The data eased concerns over a possible slowdown in U.S. recovery after Monday’s ISM manufacturing index showed that activity slumped to a seven-month low in January, which was partially the product of rough winter weather.
Elsewhere, payroll processor ADP reported that private-sector non-farm payrolls rose by 175,000 in December, below expectations for an increase of 180,000, which weakened the dollar earlier though investors concluded that a string of blizzards and bitter cold snaps may have prompted businesses to put off hiring early this year.
Friday’s official U.S. jobs report is expected to show that jobs growth rebounded in January after unseasonably cold weather in December kept gains down to 74,000.
Still the dollar didn''t rally, as winter weather can still slow growth at a time when the U.S. economy continues to battle headwinds and remains in need of Federal Reserve stimulus tools, which gave gold support on Wednesday.
Soft economic indicators have reminded investors that the Federal Reserve will trim its USD65 billion monthly bond-buying program on a gradual basis, or even leave it on hold if need be, while policy tightening remains far off on the horizon.
Meanwhile, silver for March delivery was up 2.12% and trading at USD19.833 a troy ounce, while copper futures for March delivery were flat at USD3.192 a pound.
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