Gold futures came off their lowest level since mid-January on Thursday, recouping some of the previous session’s sharp losses as some bargain buying supported prices ahead of Friday’s key monthly U.S. employment data.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at $1,631.05 U.S. a troy ounce during early U.S. trade, climbing 1.05%.
It earlier rose by as much as 1.25% to trade at a session high $1,634.55 U.S. a troy ounce. Gold futures fell to $1,613.55 U.S. on Wednesday, the lowest since January 10 and below its 50-day moving average.
Gold futures were likely to find support at USD1,606.05 a troy ounce, the low from January 9 and resistance at $1,685.25 U.S., the high from April 2.
Trading volumes were expected to remain thin ahead of the Easter holiday. Markets in the U.S. and Europe will remain closed on Friday in observance of Good Friday, while most markets in Europe will remain closed next Monday as well.
Gold futures plunged more than 4% in the two sessions leading up to Thursday, including a 3% drop on Wednesday as traders readjusted positions after minutes from the March meeting of the Federal Reserve's Open Market Committee released Tuesday indicated that the central bank was unlikely to introduce more stimulus measures to help boost the U.S. economy in the near term.
This was the second time in a month that gold has sold off in response to signals from the Fed that more easing is not guaranteed.
Gold prices dropped almost 5% in the three sessions following March’s Fed meeting after the central bank gave an upbeat assessment of the U.S. economy, which reduced expectations for a third round of monetary easing in the U.S.
Wall Street investment bank Morgan Stanley downgraded its forecast of further quantitative easing by the Federal Reserve to one-out-of-three chance from two out of three.
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 May delivery jumped 1.8% to trade at $31.60 U.S. a troy ounce, while copper for May delivery added 0.5% to trade at $3.810 U.S. a pound.
