Gold futures rise more than 1% as dollar gives back gains

New York (May 4)  Gold prices rose for the first time in three sessions on Monday, as traders monitored the direction of the dollar while speculating on the timing of a Federal Reserve rate hike.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery hit an intraday peak of $1,191.20 a troy ounce, before trading at $1,190.50 during U.S. morning hours, up $16.00, or 1.4%.

On Friday, gold hit $1,168.40, the lowest since March 19, before ending at $1,174.50, down $7.90, or 0.67%. Futures were likely to find support at $1,159.70, the low from March 19, and resistance at $1,214.60, the high from April 28.

Also on the Comex, silver futures for July delivery surged 53.8 cents, or 3.33%, to trade at $16.67 a troy ounce. Futures dipped 1.8 cents, or 0.11%, on Friday to close at $16.13.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.05% to trade at 95.34 early Monday after hitting an overnight high of 95.78.

In the week ahead, investors will be focusing on Friday’s U.S. nonfarm payrolls report for April, for a fresh indication on the strength of the economic recovery.

A recent run of disappointing U.S. economic data dampened optimism over the recovery, fuelling speculation the Federal Reserve could delay hiking interest rates until late 2015, instead of tightening midyear.

But the Fed said in its rate statement last week that recent indications of a slowdown in growth were probably due to “transitory factors.”

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 boost gold by undermining the argument for an early rate hike.

Elsewhere in metals trading, copper for July delivery inched down 1.4 cents, or 0.48%, to trade at $2.916 a pound. Prices touched $2.937 on Friday, the most since December 15, before settling at $2.929, up 4.3 cents, or 1.49%.

Data released earlier showed that Chinese manufacturing activity contracted at the fastest rate in a year in April, adding to concerns over a slowdown in the world’s second-largest economy.

China's HSBC final manufacturing purchasing managers' index slipped to 48.9 in April, down from a preliminary reading of 49.2 and compared to 49.6 in the previous month.

Losses were limited amid speculation policymakers in China will have to introduce further stimulus measures to jumpstart the economy amid lackluster growth.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption.