Gold prices inched up during Europe's session on Wednesday, bouncing off a three-and-a-half-month low as market players looked ahead to more U.S. economic data for clues on the likelihood of a December rate hike.

Gold for December delivery on the Comex division of the New York Mercantile Exchange tacked on $4.00, or 0.3%, to $1,273.70 a troy ounce by 3:15AM ET (07:15GMT). The contract fell to $1,268.60 earlier, a level not seen since June 24.
On Tuesday, prices plunged $43.00, or 3.28%, its biggest one-day percentage drop since September 2013, as the U.S. dollar climbed to a two-month high and stocks rose.

The U.S. is due to release the ADP jobs report for September at 8:15AM ET (12:15GMT), with market analysts expecting a gain of 166,000 private sector payrolls, versus the 177,000 print for the prior month.

At 10:00AM ET (14:00GMT), the U.S. Institute of Supply Management is to publish a report on service sector growth for September, amid forecasts for a reading of 53.0. In August, the gauge dropped to 51.4, its weakest level since February 2010.
A pair of Fed policymakers are also due to make public appearances on Wednesday that may offer insight into how divided they are about raising rates. Minneapolis Fed President Neel Kashkari will speak at 9:30AM ET (13:30GMT), while Richmond Fed President Jeffrey Lacker is due at 1:00PM ET (17:00GMT).

Markets are currently pricing in around a 14% chance of a rate hike in November, according to Investing.com's Fed Rate Monitor Tool. For December's meeting, odds were at nearly 63%.
Gold is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion.

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