NEW YORK: Gold gave up early gains on Wednesday as comments from a top US Federal Reserve official and record US services industry activity data shifted concerns back to the Federal Reserve potentially easing asset purchases later in the year.

Spot gold was up 0.1% at $1,811.38 per ounce by 2:11 p.m. EDT, while US gold futures settled little changed at $1,814.50. Prices jumped 1% earlier in the session on the back of weaker than expected ADP jobs data.

Offsetting the jobs data, was the Institute for Supply Management’s non-manufacturing PMI activity index, which raced to its highest reading in the series’ history last month.

“Given that the Fed said they’re going to look at economic data and maybe cut back on asset purchases come September or November, strong data like the PMI helps their cause to start cutting back,” said Bob Haberkorn, senior market strategist at RJO Futures.

The tapering view was cemented by comments from US Federal Reserve Vice Chair Richard Clarida suggesting the central bank could start cutting back on bond purchases later in the year.

Benchmark US 10-year yields rose off their low following Clarida’s comments, reducing the appeal of non-yielding bullion. The US dollar too recovered, further reducing gold’s allure.

“While negative real yields remain a relevant driver of gold prices, in the near term, safe-haven demand and dollar strength are setting the tone for trading,” said Suki Cooper, analyst at Standard Chartered.

But, the emergence of physical demand has helped to cushion downside risk to gold prices, though demand hasn’t recovered to pre-COVID levels.

Market focus now shifts to Friday’s US non-farm payroll report with economists in a Reuters poll forecasting a 926,000 increase in jobs.

Elsewhere, silver fell 0.5% to $25.42 per ounce, having earlier hit a near three-week peak.

Platinum eased 2.2% to $1,026.23 per ounce, while palladium gained 0.2% to $2,653.6.