London - Gold prices steadied below $1,400 an ounce on Wednesday, surrendering early gains, as investors took to the sidelines ahead of a US jobs report later in the day which is seen as a key precursor to Friday's non-farm payrolls reading.
The monthly payrolls data is closely watched by gold traders as the Federal Reserve has explicitly linked the continuation of its ultra-loose monetary policy, which has helped drive gold to record highs in recent years, to the health of the US jobs market.
A positive reading could encourage the Fed to rein in its $85 billion monthly bond-buying programme.
Spot gold was at $1,398.40 an ounce at 11:23 SA time, little changed from $1,399.04 late on Tuesday, when it fell nearly 1 percent.
Earlier prices rose as high as $1,408.01.
US gold futures for April delivery were up 40 cents an ounce to $1,397.60, off a high of $1,407.90.
“The market is still sitting in a fairly tight range ahead of the US jobs report,” Andrey Kryuchenkov, an analyst at VTB Capital, said.
“This will determine short-term direction.”
“Players will especially pay attention to non-farm payrolls following some hawkish comments from the Fed member lately,” he added.
Kansas City Fed President Esther George said on Tuesday slowing the pace of bond buying would not mean tightening US monetary policy and would help wean financial markets off their dependence on cheap money from the central bank.
European shares fell as fresh concerns about a possible tapering in US economic stimulus measures hit markets, while the dollar held steady against a basket of currencies ahead of the ADP jobs report, which is due at 14:15 SA time.
CHINESE GOLD IMPORTS FROM HONG KONG FALL
China's total gold imports from Hong Kong fell to 125.715 tonnes in April from a record high of 223.519 tonnes in the previous month, data showed on Wednesday, despite a drop in prices of the metal to two-year lows during the month.
Gold stayed under pressure from concerns that demand in number one buyer India will be hurt by fresh moves by the Reserve Bank of India to curb gold imports.
“Various comments from officials hint at the potential for more measures to come, as the government is taking a hard line trying to curb the country's appetite for gold,” UBS said in a note.
“This poses a risk for Indian gold demand up ahead should more and more restrictions be implemented.”
Among other precious metals, silver was up 0.1 percent at $22.49 an ounce, while spot platinum was up 0.1 percent at $1,491.49 an ounce, and spot palladium was up 0.4 percent at $751.22 an ounce. - Reuters