Gold logs modest advance after loss

By Carla Mozee, MarketWatch

LOS ANGELES (MarketWatch) — Gold futures posted thin gains in electronic trade Wednesday ahead of reports about the U.S. labor market, which the U.S. Federal Reserve is monitoring as it assesses the future of monetary stimulus.

Gold for August delivery GCQ3 +0.32% rose 20 cents to $1,243.60 an ounce.

On deck for investors is a private-sector payrolls projection for June from payroll processor ADP, followed by the U.S. Labor Department’s weekly update on jobless claims.

Bloomberg News Enlarge Image
Gold edges up ahead of fresh data.
Also, the Institute for Supply Management is likely to show somewhat faster growth in June among service-sector companies. The reports will lead up to Friday’s release of the highly anticipated U.S. monthly unemployment report.

“Investors continue to read U.S. economic news flow in terms of its implications for the timing and size of Federal Reserve stimulus reduction,” wrote currency strategist Ilya Spivak on Tuesday. “As such, soft results may boost sentiment and cycle-sensitive copper prices. Gold and silver may likewise rise as downgraded QE “taper” bets underpin anti-fiat demand.”

Analysts have said monetary stimulus by the Fed and other central banks helped fuel prices gains for gold in recent years.

Gold prices in 2013 have plunged, in part as the Fed has said improvement in the economy may lead it to pull back on bond purchases as early as this year. Fed Chairman Ben Bernanke late last month said asset purchases may be reduced to zero by the middle of 2014 when the unemployment rate is expected to have dropped to 7%.

The central bank currently buys $85 billion a month in bonds.

Gold futures on Tuesday fell 1%, their first decline in three sessions.

Meanwhile, September copper HGU3 -0.02% on Wednesday rose 3 cents, or 0.8%, to $3.17 a pound, and September silver SIU3 +1.25% rose 16 cents, or 0.8%, to $19.47 an ounce.

Platinum for October delivery PLV3 -0.23% , however, fell $1.60, or 0.1%, to $1,366.20 an ounce. September palladium PAU3 -1.03% fell $2.10, or 0.3%, to $686.80 an ounce.

U.S. markets will be closed on Thursday for Independence Day.

Carla Mozee is a reporter for MarketWatch, based in Los Angeles. Follow her on Twitter @MWMozee.

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