Gold holds below $1,200 ahead of ADP jobs report

Investing.com - Gold prices declined on Wednesday, as market players looked ahead to the release of key U.S. data later in the session for fresh indications on the strength of the economy and the timing of a U.S. rate increase.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery shed $4.20, or 0.35%, to trade at $1,190.20 a troy ounce during European morning hours. Prices held in a range between $1,189.40 and $1,195.60.

Futures were likely to find support at $1,180.20, the low from May 28, and resistance at $1,204.70, the high from June 1.

A day earlier, gold prices tacked on $5.70, or 0.48%, to settle at $1,194.40, supported by a broadly weaker U.S. dollar.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at a more than one-week low of 96.05.

The greenback weakened after data on Tuesday showed that factory orders fell 0.4% in April, confounding expectations for a 0.2% increase. On a year-over-year basis, factory orders dropped 6.4%, the sixth straight monthly decline.

The unexpectedly weak data sparked fresh fears over the outlook for second quarter growth after data last month showed that the U.S. economy contracted 0.2% in the first quarter.

Later in the day, the U.S. was to release the ADP jobs report for May, while the ISM was to report on service sector activity.

Market players were are also waiting for Friday's U.S. nonfarm payrolls report for further clues on when the Federal Reserve may raise interest rates.

A strong U.S. nonfarm payrolls report was likely to bring forward expectations on when the central bank will begin to raise rates, while a weak number could weigh on the dollar by undermining the argument for an early rate increase.

Meanwhile, hopes that Greece will soon reach an agreement with its international lenders on a cash-for-reforms deal boosted the euro.

Greece is due to make a €305 million payment to the International Monetary Fund on Friday but has warned that it will be unable to make the repayment if a deal is not reached by then.

Also on the Comex, silver futures for July delivery dipped 11.1 cents, or 0.66%, to trade at $16.68 a troy ounce. Silver rose 11.9 cents, or 0.71%, on Tuesday to end at $16.79.

Elsewhere in metals trading, copper for July delivery declined 0.9 cents, or 0.32%, to trade at $2.727 a pound. On Tuesday, futures advanced 1.6 cents, or 0.59%, to close at $2.736.