U.S. manufacturing contracts at moderate pace in August
Gold likely to scale new highs in longer term analyst
Bullion up 21 so far this year

Sept 4 Reuters Gold prices held steady on Wednesday as investors braced for a monthly U.S. payrolls report that could influence how swiftly and deeply the Federal Reserve cuts interest rates this year.

Spot gold held its ground at 2,491.01 per ounce, as of 0624 GMT. U.S. gold futures steadied at 2,522.20.

Before the nonfarm payrolls report on Friday, job openings data on Wednesday and the ADP employment and jobless claims reports on Thursday will be in focus.

Traders see a 41 chance of a 50basispoint bp rate cut on Sept. 18 and a 59 chance of a 25bp reduction, according to the CME Group39;s FedWatch Tool.

If the jobs data is weak, it will increase the probability of a 50bp cut and raise worries about growth slowdown, which will be supportive for gold, said Kyle Rodda, a financial market analyst at Capital.com.

But from a technical viewpoint, positioning is a bit too long for gold and this might limit upside, said Rodda, adding that prices were likely to scale new highs in the longer run, even if there was a pullback in the shortterm because of positioning.

Data on Tuesday showed that U.S. manufacturing contracted at a moderate pace in August amid some improvement in employment.

Bullion is considered a safe asset during political and economic uncertainty and tends to thrive in a low rate environment.

So far this year,…