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Gold futures pare losses after ISM data, U.S. debt vote eyed

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Forexpros - Gold futures pared losses on Monday, pulling back from a two-day low after worse-than-expected data on U.S. manufacturing activity added to concerns over the U.S. economic outlook ahead of a vote on a deal to raise the U.S. debt ceiling.

On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,624.85 a troy ounce during U.S. morning trade, edging 0.2% lower.

It earlier fell as much as 1% to trade at USD1,608.85 a troy ounce, the lowest price since July 28.

The U.S. Institute for Supply Management said earlier that its index of purchasing managers fell to 50.9 in July, down from June's reading of 55.3. Analysts had expected the ISM index of purchasing managers to decline to 54.8 in July.

Meanwhile, gold prices were supported amid lingering concerns over a possible downgrade of the U.S. sovereign debt rating.

Late on Sunday, President Barack Obama announced a deal between Republicans and Democrats to cut spending and raise the USD14.3 trillion debt ceiling, easing worries about a potential sovereign debt default.

Under the framework deal, which was to be voted on in Congress later in the day, the debt ceiling will be raised by at least USD2.1 trillion, sufficient to serve the government's needs into 2013.

Ratings agency Standard & Poor's said that it might lower the U.S. AAA sovereign credit rating if a deal is not accompanied by a "credible solution" on the debt burden, it said in a report July 21.

Global financial service provider Deutsche Bank said in a report earlier that it expected gold prices to remain well-supported in the short-term amid ongoing global economic uncertainties.

"The prospect of a powerful rally in gold reflects ongoing stress in the financial system and the maintenance of super low interest rates," the lender said in a report.

Elsewhere on the Comex, silver for September delivery shed 0.8% to trade at USD39.58 a troy ounce, while copper for September delivery dropped 1.05% to trade at USD4.438 a pound.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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