Investing.com - Gold prices dropped on Thursday after weekly jobless claims data pointed to a recovery in the U.S. labor market, something the Federal Reserve has said will indicate the need to taper monetary stimulus programs soon. Stimulus tools such as the Fed's USD85 billion in monthly bond purchases aim to spur recovery by driving down interest rates, weakening the U.S. dollar in the process and thus making gold an attractive hedge. Talk of tapering often sends gold prices falling. On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,242.20 during U.S. afternoon hours, down 1.26%. Gold prices hit a session low of USD1,235.90 a troy ounce and high of USD1,249.50 a troy ounce. Gold futures were likely to find support at USD1,214.55 a troy ounce, the low from July 8, and resistance at USD1,293.60, Thursday's high. The December contract settled down 1.22% at USD1,258.00 a troy ounce on Wednesday. The Department of Labor reported earlier that the number of individuals filing for initial jobless benefits in the U.S. last week fell by 21,000 to a seasonally adjusted 323,000, beating expectations for a decline of 9,000. The data sent gold prices falling a day after the Federal Reserve said in the release of its October policy meeting minutes that it might begin tapering the pace of its monthly bond purchases soon if conditions in the labor market improve. "During this general discussion of policy strategy and tactics, participants reviewed issues specific to the Committee's asset purchase program. They generally expected that the data would prove consistent with the Committee's outlook for ongoing improvement in labor market conditions and would thus warrant trimming the pace of purchases in coming months," the minutes from the Oct. 29-30 meeting read. Elsewhere, the Federal Reserve Bank of Philadelphia said that its manufacturing index fell to 6.5 in November from 19.8 in October. Economists had expected the index to decline to 15.0. The employment component of the index dropped to 1.1 from a reading of 15.1 last month, though investors focuses largely on the weekly jobless claims. Separate government data revealed that the U.S. producer price index declined 0.2% in October, in line with expectations, while the country's core PPI rose 0.2%, beating market calls for a 0.1% gain, which markets also viewed as bearish for the yellow metal. Elsewhere on the Comex, silver for December delivery was down 1.00% at USD19.858 a troy ounce, while copper for December delivery was up 1.10% and trading at USD3.194 a pound.

Source