Gold ends mixed as market awaits payrolls data

NEW YORK Thu Sep 1, 2011 5:36pm EDT

Gold and silver bars are pictured at the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna August 26, 2011. REUTERS/Lisi Niesner

Gold and silver bars are pictured at the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna August 26, 2011.

Credit: Reuters/Lisi Niesner

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NEW YORK (Reuters) - Gold was mildly mixed by the close on Thursday, with many investors reluctant to take their positions in the precious metal too far in either direction a day ahead of key U.S. employment figures.

Gold fell sharply in early trade after better-than-expected U.S. economic data allayed recession fears and boosted the dollar. But by late in the session, spot gold prices had moved into positive territory and U.S. gold futures were only slightly lower, as investors awaited the jobs data.

Both spot gold and futures logged inside days on pricecharts, within the highs and lows of the previous session.

"Today's (economic) numbers were kind of a mixed bag. But they were still bearish for our economy and bullish for gold. But I think it's aiding in the sideways trade we're seeing. There's no real defining factor that is pushing people in one direction of the other," said Fred Schoenstein, metals trader at Heraeus Precious Metals Management in New York.

Spot gold was up slightly at $1,824.40 an ounce by 4:23 p.m. EDT (2023 GMT) having earlier slipped to $1,815.15.

Meanwhile, Benchmark COMEX December gold futures settled down $2.60 at $1,829.10 per ounce, after falling earlier as low as $1,815.50 an ounce.

Investors were reluctant to place big bets ahead of the government's August employment report, expected to show a tepid 75,000 increase in payrolls.

A big surprise in the jobs data could move gold prices up or down. Short of a huge discrepancy with forecasts, however, many players will continue to try to ride the middle ground.

"If non-farm payrolls are terrible tomorrow, we'll see gold move. But for now, I think people are relatively hesitant to add onto positions or even to initiate new positions at this level. And, if you are long, why would you take profit here?," said Heraeus' Schoenstein.

The U.S. Labor Department's monthly data are due at 8:30 a.m. EDT (1230 GMT).

After mixed economic readings released in recent sessions, the labor market figures should guide investors in positioning themselves ahead of the long U.S. Labor Day weekend. But the looming holiday may help keep trading in a range.

Earlier on Thursday, gold fell to session lows on mixed economic readings. Weekly jobless claims and the August manufacturing series were stronger than expected, but still weak enough to show a very sluggish U.S. economy.

"Gold is off again and I think it's partly the somewhat stronger U.S. dollar and of course the economic data--the claims data, but even more so the ISM index has suggested that we're not in a recession at this point," said Peter Buchanan, senior economist at CIBC World Markets in Toronto.

Even though neither of the economic reports were strong, Buchanan added that they came in better than "about 95 percent of the analysts' forecasts."

The euro dropped broadly against the dollar as the Institute for Supply Management's (ISM) factory activity index stayed above 50, the expansion threshold, in the face of weak manufacturing readings out of Europe.

The pace of growth in the U.S. manufacturing sector slowed to a crawl in August, but was better than economists had forecast and still expanding.

Gold's losses were trimmed when some soft readings within the reports pulled equities off their highs and eventually to a 1 percent decline by the close.

Reuters asset allocation polls on Wednesday showed leading fund companies were holding less than 50 percent of their mixed-asset portfolios in stocks.

"The market I think is betting on further policy support for the economy, which would be positive for gold," said Credit Agricole analyst Robin Bhar.

Silver prices edged up in late trade to $41.53 an ounce from $41.47 previously.

Data released on Wednesday showed a rise in Mexican silver output in June of just over 300,000 kg.

Elsewhere, spot platinum rose to $1,843.85 an ounce, while spot palladium rose to $779.35 from $778.50.

Prices at 3:09 p.m. EDT (1909 GMT)

(Additional reporting by Jan Harvey in London; editing by Marguerita Choy and David Gregorio)

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Aug 31, 2011 11:02pm EDT  --  Report as abuse
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