Forexpros – Gold futures retraced losses to trade modestly higher during U.S. morning hours on Wednesday, as disappointing U.S. economic data on manufacturing activity and consumer prices renewed expectations for fresh easing measures in the U.S.
On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,600.95 a troy ounce during U.S. morning trade, easing up 0.05%.
Prices fell by as much as 0.7% earlier to trade at USD1,590.25 a troy ounce, the lowest since August 3.
Gold futures were likely to find near-term support at USD1,587.05 a troy ounce, the low from August 3 and resistance at USD1,616.75, the previous session’s high.
Gold futures turned higher after official data showed that core consumer price inflation in the U.S. rose less-than-expected in July, while prices including food and energy costs were flat.
The U.S. Department of Labor said that core consumer prices rose by a seasonally adjusted 0.1% in July, below expectations for a 0.2% gain. Year-over-year, core consumer prices rose at an annualized rate of 2.1% last month, down from 2.2% in June.
Core prices are viewed by the Federal Reserve as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories. The central bank usually tries to aim for 2% core inflation or less.
Consumer prices, including food and energy costs, were flat last month, compared to expectations for a 0.2% increase. Consumer prices were flat in June as well.
CPI increased at annualized rate of 1.4% in July, down from 1.7% in June.
A separate report showed that manufacturing activity in the New York-region deteriorated significantly more-than-expected in August, contracting for the first time since October 2011.
The reports sparked fresh speculation that the Federal Reserve may turn to fresh stimulus measures in the near future to shore up growth.
Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would pump more money into the financial system.
Gold prices fell by as much as 1% Tuesday after official data showed that retail sales in the U.S. posted the largest monthly gain since February, easing concerns over the country’s economic outlook.
Market players are already beginning to focus on an annual meeting of economists and central bankers in Jackson Hole, Wyoming, at the end of August.
Expectations of monetary stimulus tend to benefit gold, as the metal is seen as a safe store of value and inflation hedge.
Elsewhere on the Comex, silver for September delivery added 0.15% to trade at USD27.80 a troy ounce, while copper for September delivery slumped 0.15% to trade at USD3.354 a pound.
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