Gold prices dip in Asia as investors eye dollar, holiday demand

Investing.com - Gold prices dipped in Asia on Wednesday as investors awaited fresh cues on the dollar and holiday demand.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at $1,196.80 a troy ounce, down 0.13%, after hitting an overnight session low of $1,191.80 and off a high of $1,212.50.

Overnight, gold futures dropped on Tuesday after the dollar firmed on news that U.S. construction activity saw an uptick in November, which boosted demand for the dollar.

Gold and the dollar tend to trade inversely with one another.

The Census Bureau reported earlier that U.S. construction spending rose 1.1% in October from a month earlier, beating market estimates for a 0.6% gain after a 0.1% contraction in September.

It was the largest gain since May, and the report boosted the dollar by cementing expectations for the Federal Reserve to hike benchmark borrowing costs in 2015.

Investors were keeping an eye towards Friday, when the Bureau of Labor Statistics will release its November jobs report.

The European Central Bank will announce its latest decision on monetary policy this Thursday, and investors avoided the single currency ahead of time on uncertainty as to whether monetary authorities will announce fresh stimulus measures.

Data released last Friday revealed that the annual rate of euro area inflation slowed to a five-year low of 0.3% last month from 0.4% in October.

Sentiment on the single currency also remained vulnerable after data on Monday showed that the euro zone’s manufacturing purchasing managers' index slowed to 50.1 from a preliminary reading of 50.4 last month, just barely above the 50 level separating growth from contraction.

The ECB's current stimulus program includes purchases of asset-backed securities and covered bonds, though markets are keeping a close eye out for plans to announce purchases of government debt, which could boost demand for gold as a safe haven, though a stronger dollar could offset that trend and soften the yellow metal even further.

Silver for March delivery was down 0.15% at $16.445 a troy ounce. Copper futures for March delivery eased 0.18% at $2.883 a pound.