Forexpros – Gold futures traded lower during U.S. afternoon hours Monday, although off the worst levels of the session, upon a broadly higher greenback and data indicating manufacturing activity in the U.S. contracted for the first time since July 2009 in June.
Uncertainty over a European Union agreement on fresh measures to deal with the debt crisis in the euro zone also weighed on market sentiment.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,598.05 a troy ounce during U.S. afternoon trade, falling 0.40%.
It earlier fell by as much as 1.3% to trade at a session low of USD1,587.65 a troy ounce. Prices hit USD1,607.45 a troy ounce on Friday, the highest since June 21.
Gold futures were likely to find near-term support at USD1,548.45 a troy ounce, the low from June 28 and resistance at USD1,622.95, the high from June 20.
Gold futures cut losses when the U.S. Institute for Supply Management reported its index of purchasing managers fell by 3.8 point to 49.7 in June from a reading of 53.5 in May, the first contraction since July 2009.
Analysts had expected the ISM index of purchasing managers to decline by 1.5 points to 52.0.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
Meanwhile, investors were beginning to focus on Thursday’s European Central Bank policy meeting, amid growing expectations for a rate cut, as well as Friday’s U.S. nonfarm payrolls data.
Gold investors will be closely watching U.S. data in the second quarter for clues as to the likelihood of a fresh round of monetary easing, which could potentially hurt the dollar and support gold.
Trading volume in the U.S. will likely be light this week amid the Independence Day holiday on Wednesday.
Precious metals prices surged Friday, with gold prices jumping 3% and silver soaring 5% after European leaders agreed to use the euro zone’s bailout funds to support struggling banks directly, without adding to national debt, and to purchase government debt in order to keep borrowing costs down.
Leaders also agreed to set up a joint banking supervisory body for the euro area.
However, market sentiment weakened Monday amid questions over the long-term effectiveness of the measures in addressing the core causes of the euro zone’s debt crisis and uncertainty over how and when the measures can be implemented.
Earlier Monday, Finland and the Netherland’s reiterated their opposition to using euro zone bailout funds to purchase government bonds.
Elsewhere on the Comex, silver for September delivery fell 0.27% to trade at USD27.54 a troy ounce, while copper for September delivery dropped 0.96% to trade at USD3.463 a pound.
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