Gold holds gain after dismal May as investors weigh rate outlook

Bloomberg

Gold held the first advance in 10 days as investors looked to the release of U.S. data this week including monthly payrolls that’ll shape the thinking of Federal Reserve policy makers on whether to raise interest rates in the months ahead.
Bullion for immediate delivery traded at $1,216.18 an ounce by 10:10 a.m. in London from $1,215.32 on Tuesday, when the metal rose 0.9 percent, according to Bloomberg generic pricing. The metal lost 6.1 percent in May, the biggest monthly drop since November.
Gold’s dismal performance last month trimmed the year’s rally to 15 percent, with investors parsing data and comments from Fed executives to gauge the likelihood of tighter policy. The odds of a rate increase in June or July climbed along with the dollar last month, hurting bullion which doesn’t pay interest.
The Fed’s Beige Book, a survey of economic conditions, is due, followed by non-farm payrolls on Friday. Fed Chair Janet Yellen is due to speak in Philadelphia on June 6. The European Central Bank also announces its latest policy decision on Thursday.
“The focus now has shifted towards the ECB policy meet due tomorrow and their outlook for the coming quarter, followed by the grand event of the week — the NFP report,” Karvy Commodities Broking said in a note Wednesday. The payrolls report “is likely to influence the policy members while deciding upon the future course of monetary policy.” Gold’s gain on Tuesday followed figures that showed U.S. consumer confidence unexpectedly fell while manufacturing gauges weakened.
“The market direction will be dictated by economic figures and as such will be jumpy,” David Govett, head of precious metals at Marex Spectron Group Ltd. in London, said by e-mail.
China’s official factory gauge for May released Wednesday remained just above the dividing line that signals improving conditions for a third month, adding to recent evidence of stabilization in the world’s second-largest economy.