Investing.com - Gold prices drifted higher in in quiet pre-holiday trade on Wednesday, as investors looked ahead to key U.S. economic data later in the session for further indications on the strength of the economy.
Trading volumes are expected to remain light, with much of the Western world already shuttered for the Christmas and year-end holidays. U.S. markets close at 1:00PM ET Thursday, Christmas Eve, and are shut Friday for Christmas Day.
Gold for February delivery on the Comex division of the New York Mercantile Exchange tacked on $4.10, or 0.38%, to trade at $1,072.40 a troy ounce during European morning hours. A day earlier, gold dipped $5.80, or 0.54%, the second straight daily loss.
The U.S. is to release a weekly report on initial jobless claims at 8:30AM ET Thursday, amid expectations for a decline of 1,000 to 270,000.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.4% at 97.99 during European morning hours. The index, which has fallen back to levels seen before the Federal Reserve raised interest rates on December 17, remains well off last week's two-week high of 99.33.
The greenback weakened followed the release of mixed U.S. economic data on Wednesday. Orders for U.S. core capital goods, a key barometer of private-sector business investment, declined 0.4% last month, while shipments of core capital goods, a category used to calculate quarterly economic growth, slumped 0.5%.
However, separate reports showed that personal spending rose for the eighth straight month in November, while consumer sentiment improved to a five-month high in December.
With the first U.S. rate hike since 2006 out of the way, the focus is now on the pace of future rate increases. The Fed, from its forecasts, is anticipating four rate hikes next year. However, the Fed funds futures currently suggests there will be just two rate increases, in June and December.
Gold is on track to post an annual decline of 10% in 2015, the third yearly loss in a row, as speculation over the timing of a Fed rate hike dominated market sentiment for most of the year. Rising interest rates historically have been bad news for gold, which can't compete with the higher interest rates offered by other assets.
Meanwhile, silver futures for March delivery inched up 1.8 cents, or 0.13%, to trade at $14.30 a troy ounce. Silver is on track to post an annual decline of 8% in 2015.
Elsewhere in metals trading, copper dipped 0.3 cents, or 0.16%, to $2.121 a pound. The red metal is on track to post an annual decline of 26% in 2015 as fears of a China-led global economic slowdown spooked traders and rattled sentiment.
The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.