Investing.com - Gold prices languished near five-week lows on Wednesday, after better than expected U.S. employment and trade data supported the case for higher interest rates as early as December.
Gold for December delivery on the Comex division of the New York Mercantile Exchange tacked on $3.50, or 0.31%, to trade at $1,117.60 a troy ounce during U.S. morning hours.
A day earlier, gold prices fell to $1,113.60, the lowest since October 2, as investors continued to cut holdings of the precious metal amid expectations the Federal Reserve will raise interest rates at its next meeting in December.
Payroll processing firm ADP said non-farm private employment rose by 182,000 last month, above expectations for an increase of 180,000. The economy created 190,000 jobs in September, whose figure was downwardly revised from a previously reported increase of 200,000.
A separate report showed the U.S. trade deficit shrank 15% in September to hit a seven-month low of $40.81 billion. Analysts had expected the U.S. trade deficit to narrow to $41.1 billion from a deficit of $48.02 billion in August.
The U.S. dollar rose against its major counterparts as expectations grew the Federal Reserve would tighten monetary policy in the coming months. Dollar-priced commodities become more expensive to investors holding other currencies when the greenback gains.
Market players now looked ahead to Friday's U.S. nonfarm payrolls report. The consensus forecast is that the data will show jobs growth of 182,000 in October, following an increase of 142,000 in September, while the unemployment rate is forecast to hold steady at 5.1%.
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 undermine the argument for an early rate hike.
The timing of a Fed rate hike has been a constant source of debate in the markets in recent months. The U.S. central bank has one more scheduled policy meeting before the end of the year in mid-December.
Gold had rallied in October as concerns over a global economic slowdown led by China and its impact on U.S. growth prospects had prompted market participants to push back expectations for a rate increase to March 2016.
But the Fed's hawkish statement last week forced market players to readjust expectations for higher interest rates to as early as December, triggering a sell-off in the bullion market.
Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.
Elsewhere in metals trading, copper prices rose to a one-week high on Wednesday, after mining giant Glencore (L:GLEN) announced further supply cuts of the red metal.
Copper for December delivery on the Comex division of the New York Mercantile Exchange jumped 2.4 cents, or 1.02%, to trade at $2.354 a pound during morning hours in New York.
Switzerland-based Glencore said it will cut an additional 55,000 metric tons of copper output by the end of 2017, the latest in a string of supply cuts, as the commodities group races to cut debt and shore up its balance sheet.
In September, Glencore said it would cut copper production from mines in Zambia and the Democratic Republic of Congo by 400,000 tons.
In total, about 450,000 metric tons of annual supply will be removed from the global market.