Gold futures edge higher with U.S. economy in focus

Gold rises with U.S. economy in focus

 Gold edged higher on Tuesday, as market players looked ahead to the release of key U.S. data later in the week for further indications on the strength of the economy and the future path of monetary policy.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery tacked on $7.30, or 0.57%, to trade at $1,284.20 a troy ounce during European morning hours.

Prices held in a range between $1,272.60 and $1,285.80. On Monday, gold shed $2.30, or 0.18% to settle at $1,276.90.

Futures were likely to find support at $1,257.50, the low from January 30, and resistance at $1,294.60, the high from January 28.

Optimism over the health of the U.S. economy weakened after data on Monday showed that U.S. consumer spending fell at the fastest rate since September 2009 in December.

Separate reports showed that U.S. construction spending rose less than expected in December, while manufacturing growth slowed.

The disappointing numbers came after data last week that showed the U.S. economy grew by a weaker-than-expected 2.6% in the fourth quarter, slowing sharply from growth of 5.0% in the preceding quarter.

Later in the day, the U.S. was to release data on factory orders. Market players also looked ahead to the release of the latest U.S. nonfarm payrolls report on Friday, for further indications on the strength of the recovery in the labor market.

Market analysts expect the data to show that the U.S. economy added 234,000 jobs in January, slowing from a gain of 252,000 in December, while the unemployment rate was forecast to hold steady at 5.6%.

A strong U.S. nonfarm payrolls report was likely to add to speculation over when the Federal Reserve will begin to raise interest rates, while a weak number could boost gold by undermining the argument for an early rate hike.

Gold prices ended January with a gain of $94.20, or 7.96%, as investors sought safety from volatility in global financial markets.

Also on the Comex, silver futures for March delivery jumped 41.9 cents, or 2.43%, to trade at $17.67 a troy ounce. Silver rose 4.3 cents, or 0.25%, to end at $17.25 on Monday. Prices soared $1.47, or 10.31%, in January.

Elsewhere in metals trading, copper for March delivery surged 7.7 cents, or 3.08%, to trade at $2.567 a pound as a rally in oil and global equity markets lifted sentiment.

Oil prices are up nearly 14% in the three sessions including Tuesday, as investors closed out bets on lower prices after data showed the number of U.S. oil drilling rigs had fallen by the most in nearly 30 years last week.

London-traded Brent prices rose $1.97, or 3.6%, to $56.72 a barrel, while Nymex oiltacked on $1.59, or 3.22%, to hit $51.17.

Meanwhile, Asian stocks markets ended mostly higher as a surprise rate cut by Australia’s central bank boosted sentiment.

Shares in Shanghai rallied more than 2% after Monday's soft Chinese manufacturing data added to speculation that policymakers in Beijing may implement fresh stimulus measures to support the economy.

In Europe, markets were boosted by hopes that Greece’s new government would be able to reach a compromise with its international creditors on the terms of its bailout.