Thursday August 1, 2013 2:25 PM
(Kitco News) - Gold prices ended Thursday's day session slightly weaker in thin trading conditions as market participants prepared for Friday's all-important U.S. July unemployment report.
Most-active December gold futures on the Comex settled $1.80 weaker at $1,311.20 an ounce. September silver fell 0.4 cent to $19.624. Nymex September palladium settled $5.50 higher to $731.85, and October platinum gained $11.40 to $1,443.80.
Prices started the session firmer, but came off the highs following stronger-than-expected economic data from the Institute of Supply Management, which said that its July manufacturing index rose to 55.4 from 50.9 in June, the highest level since August 2011.
A stronger dollar and record highs in the stock market, including the Standard & Poor's 500 stock index reaching 1,700 for the first time, provided a lid on gains, analysts said.
Gold prices hugged unchanged, flip-flopping between higher and lower as traders positioned themselves ahead of Friday's payrolls data. Expectations are that the report from the Bureau of Labor Statistics will show between 175,000 and 185,000 jobs were created in July.
"It really was a chopfest today and these light volume days are a typical pre-unemployment trading session," said Jim Comiskey, senior account executive for Archer Financial Services.
Market participants are closely watching economic data as the Federal Reserve has said if the U.S. economy shows signs of sustainable growth, it will seek to slow down its bond-buying program known as quantitative easing. One of the most important pieces of data will be how the labor market is faring, which is why the monthly jobs report is so important.
Jim Steel, analyst at HSBC, said if the employment report data comes out well-above expectations, "it's very likely that the market could react negatively" as it could give the Fed another reason to start tapering the asset purchases.
Conversely, a lower-than-expected could give gold a boost for the opposite reasons, he said. "However, it doesn't really change the dynamic," he added, since the Fed is seeking to eventually end the stimulus program.
Two other pieces of labor-related data are supportive to a slowly growing job market. Payroll processor ADP said Wednesday businesses added 200,000 jobs in July, and on Thursday, weekly jobless claims fell to a near six-year low.
Comiskey said gold's trade above $1,300 is a positive sign for bullish traders. "Gold is trying to build a base here and if we hold $1,300 we could make an assault back to $1,348, the high from last week. The fact that gold and silver weren't much lower and the dollar was stronger is bullish sign," he said.
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By Debbie Carlson of Kitco News; firstname.lastname@example.org
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