Gold falls as U.S. jobless claims report sparks talk of Fed tapering

Gold falls as U.S. jobless claims report sparks talk of Fed tapering

Investing.com – Gold prices fell on Thursday after better-than-expected data out of the U.S. labor market rekindled expectations for the Federal Reserve to begin tapering the pace of its USD85 billion in monthly asset purchases, which weaken the dollar to spur recovery.

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

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,324.70 during U.S. afternoon hours, down 0.86%.

Gold prices hit a session low of USD1,319.40 a troy ounce and high of USD1,339.60 a troy ounce.

Gold futures were likely to find support at USD1,306.20 a troy ounce, Tuesday's low, and resistance at USD1,375.10, last Thursday's high.

The December contract settled up 1.51% at USD1,336.20 a troy ounce on Wednesday.

The U.S. Department of Labor reported earlier that the number of individuals filing for initial jobless claims in the week ending Sept. 20 fell by 5,000 to a seasonally adjusted 305,000 from a downwardly revised 310,000 the previous week.�

Analysts were expecting the figure to rise to 325,000, and the better-than-expected report fueled expectations that a more robust U.S. economy will prompt the Federal Reserve to begin tapering the pace of its monthly bond purchases soon.

Asset purchases weaken the greenback by driving down interest rates to spur recovery, which makes gold an attractive hedge.

Still, softer-than-expected data out of the U.S. housing market capped gold's gains by keeping expectations going that the Fed will very gradually wind down stimulus programs and won't tighten policy any time in the near future.

Industry data released earlier showed that U.S. pending home sales dropped 1.6% in August, more than an expected 1.0% decline following a downwardly revised 1.4% contraction the previous month.�

Also on Thursday, official data showed that the U.S. economy expanded by 2.5% in the second quarter, just shy of expectations for a 2.6% expansion.�

Elsewhere on the Comex, silver for December delivery was down 0.65% at USD21.743 a troy ounce, while copper for December delivery was up 0.99% and trading at USD3.305 a pound.