Gold tumbles to $1,190 after upbeat U.S. jobless claims report

Investing.com - Gold prices tumbled below the $1,200-level on Thursday, after data showed that the number of people who filed for unemployment assistance in the U.S. last week fell to the lowest level since 2000, fuelling optimism over the strength of the labor market.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery hit an intraday low of $1,191.20 a troy ounce, before trading at $1,192.60 during U.S. morning hours, down $17.50, or 1.45%.

On Wednesday, gold shed $3.90, or 0.32%, to close at $1,210.00. Prices hit a three-week peak of $1,214.60 on Tuesday.

Futures were likely to find support at $1,177.60, the low from April 27, and resistance at $1,214.60, the high from April 28.

Also on the Comex, silver futures for July delivery dropped 16.2 cents, or 0.97%, to trade at $16.54 a troy ounce. A day earlier, silver rose to $16.72, a level not seen since April 8, before ending at $16.70, up 7.2 cents, or 0.43%.

The U.S. Department of Labor said the number of individuals filing for initial jobless benefits fell by 34,000 last week to 262,000 from the previous week’s total of 296,000. Analysts had expected initial jobless claims to fall by 6,000 to 290,000 last week.

At the same time, the Commerce Department said that personal spending inched up 0.4% last month, below expectations for a gain of 0.5%. Consumer spending is the single biggest source of U.S. economic growth, accounting for as much as two-thirds of economic activity.

A separate report showed that U.S. employment costs, or the change in the price businesses and the government pay for civilian labor, rose by 0.7% in the three months ended March 31, above expectations for a 0.6% increase.

The upbeat data eased concerns over the strength of the economy and fuelled speculation that the Federal Reserve could bring forward its timetable for a U.S. rate hike.

The Federal Reserve kept interest rates on hold on Wednesday and offered little hints on the timing of its first rate hike in nearly a decade.

In its monthly policy statement on Wednesday, the Fed said it will take into account labor market conditions, inflationary pressures and expectations of international financial developments when it decides on the timing of a rate increase.

The central bank removed all calendar references on a potential window for raising rates from its statement, adding to uncertainty over the timing of a Fed rate hike.

The statement came after data on Wednesday showed that the U.S. economy grew just 0.2% in the three months to March, slowing sharply from 2.2% in the final quarter of 2014. It was the slowest rate of growth in a year.

A recent run of disappointing U.S. economic data dampened optimism over the recovery, fuelling speculation the Fed could delay hiking interest rates until late 2015, instead of tightening midyear.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.1% at 95.21 early on Thursday, after hitting an overnight low of 94.48, the weakest level since February 26.

Elsewhere in metals trading, copper for July delivery rallied 5.4 cents, or 1.92%, to trade at $2.853 a pound, the strongest level since March 26.

Copper remained supported amid speculation policymakers in China will have to introduce further stimulus measures to jumpstart the economy amid lackluster growth.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption.