Gold futures headed lower for a second straight session on Thursday, with prices dropping below the support level of $1,180 an ounce after data showed the number of workers making first-time claims for jobless benefits fell again.
Gold for August delivery on Comex GCQ5, -0.90% was down $11.10, or 0.9%, to $1,173.80 an ounce. A close around this level would be the lowest for a most-active contract since March 19. July silver SIN5, -2.00% fell 33.5 cents, or 2%, to $16.145 an ounce.
Gold losses deepened after data showed 276,000 people applied for unemployment benefits in the week ended May 30, down 8,000 from the previous week and reflecting continued improvement in the labor market.
The data feed expectations for a strong U.S. jobs report on Friday, analysts said. That would reinforce expectations the Federal Reserve will move sooner rather than later to hike interest rates, a potential negative for gold, which doesn’t bear interest. See economic calendar.
The “link to the euro EURUSD, -0.0710% and weaker dollar DXY, +0.01% is not working at the moment,” said Julian Phillips, founder of and contributor to GoldForecaster.com. He expects Asian demand to “come in at these prices, but it is clear that New York does not reflect global demand — only U.S. demand.”
“Because the volumes are so thin, we can expect large price moves of little significance,” Phillips said.
He explained that the banks have largely exited Comex and physical volumes either go direct to buyers or through London. “London is thinning out over time too as China develops the Shanghai Gold Exchange,” he said.