Prices of gold futures fell to the lowest level in more than 5-weeks after a separate report showed fewer US workers who lodged jobless claims last week fell more than expected, fueling concern that a strong job market keeps the Fed on the way to raise interest rates this year.
On the Comex, gold futures for delivery in August hit an intraday low of $1,176.30 a level not seen since May 1, before trading at $1,180.80.
The Labor, Department of the United States said the number of individuals requesting initial unemployment benefit decreased by 8,000 last week to 276,000 from the as revised total number of 284,000 the previous week. Analysts had expected initial unemployment claims to fall to 5000-279000 last week.
Gold erased its gains for the year as data on employment complemented to signs that the economy is sufficiently strong for holding higher borrowing costs, paving the way for the Fed to raise its benchmark interest rate for the first time since 2006. The highest rates erode the appeal of the precious metal, which does not pay interest as investors are looking for higher yielding assets, including new bonds.
Latest economic reports have indicated that the US economy was regaining strength after trading in the first quarter, fueling speculation that the Federal Reserve may raise rates as early as September.
Now, investors stared ahead of US jobs report on Friday, which is forecast to show a gain of 225,000 jobs in May, after an increase of 223,000 in April.
At the Multi Commodity Exchange, gold June futures declined Rs 57, or 0.21 per cent, to Rs 26,751 per 10 grams as speculators trimmed positions, tracking a weak global trend.
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