MW: Gold slightly lower on jobs data, deflation worries
Gold futures fell in early Thursday trading as fresh jobs data fueled hopes that the U.S. economy is stabilizing, reducing gold's appeal as a safe asset.
First-time claims for state unemployment benefits fell to their lowest level since the end of January in the latest week, the Labor Department reported. Stock futures and crude oil extended their gains after the jobs report, damping gold's attractiveness as an investment.
Gold for June delivery was last down $2.20, or 0.3%, at $891.30 an ounce on the Comex division of the New York Mercantile Exchange. Trading remained in a tight range as investors held different views on the direction of the economy and inflation.
In gold trading, it's "almost a tug of war between buyers and sellers, inflation or deflation believers," said George Gero, a precious-metals trader for RBC Capital Markets.
Sending gloomy economic news, building permits fell to a record-low level and construction of new homes dropped sharply again in March, the Commerce Department estimated. A big gain in February had raised hopes of a recovery.
Meanwhile, the Federal Reserve said in its Beige Book released Wednesday that the economy continued to worsen across in March and early April, but "five of the 12 districts noted a moderation in the pace of decline, and several saw signs that activity in some sectors was stabilizing at a low level."
Gold investors also watched closed signs of deflation, as the metal is seen as a hedge against rising prices.
Firming deflation worries, the Labor Department reported Wednesday that the consumer-price index fell a seasonally adjusted 0.1% in March. The government also reported Tuesday that inflation at the wholesale level fell more sharply than had been anticipated last month amid weaker energy prices.
But some investors said the government's bailout plans and the Fed's efforts to provide more liquidity will increase inflation in the long term.
In gold exchange-traded funds, holdings in SPDR Gold Share , the biggest ETF backed by gold, stood at 1,127.68 tons Wednesday, unchanged for a fourth straight session, according to the fund's latest data.
In other metals trading Thursday, silver for May delivery fell 1.6% to $12.60 an ounce. June palladium was down 0.8% at $236.55 an ounce, while July platinum lost 0.2% to $1,222.60 an ounce.
May copper declined 0.3% to $2.1925 a pound.
