NEW YORK (MarketWatch) — Gold prices extended a slide Thursday after a larger-than-expected drop in first-time U.S. jobless claims added to worries the Federal Reserve could move more quickly than anticipated to tighten monetary policy in response to an improving labor market.
Gold for December delivery GCZ4, -1.27% was down $17.20, or 1.3%, at $1,278.10 an ounce. It hit an intraday low of $1,274 after the Labor Department said initial claims fell by 14,000 to 298,000 in the week ended Aug. 16. Economists had been looking for a figure of 300,000.
September silver SIU4, -0.45% fell nearly 13 cents, or 0.7%, to $19.37 an ounce.
A day earlier, minutes from the Federal Reserve’s latest policy meeting proved more hawkish than many traders had anticipated. Tighter monetary policy is typically a negative for gold, which had rallied sharply in the wake of the financial crisis as major central banks opened the spigots and pursued ultra-loose and unconventional monetary policy measures.
“Some members [of the Fed’s policy-making committee] feel increasingly uncomfortable about the idea of leaving interest rates low for an extended period. This had not been anticipated and has been perceived by the market as overly hawkish,” said Eugen Weinberg, commodities strategist at Commerzbank.
A tighter Fed is also seen boosting the dollar, which is another negative for gold and other commodities priced in the currency. Read: You need to start watching the U.S. dollar.
Today’s slate of data is more than just an appetizer leading up to Fed Chairwoman Janet Yellen’s speech on Friday. Next up are existing home sales and the Philly Fed manufacturing survey at 10 a.m. Eastern.
Kitco’s Jim Wyckoff warned that the strengthening dollar could continue to dog gold prices.
“A feature in the market place recently has been a stronger U.S. dollar against the other major currencies of the world,” he said in comment’s on Kitco’s website. “There has been increased safe-haven demand for the dollar amid the recent heightened geopolitical tensions. The stronger dollar is a bearish underlying factor for the raw commodity sector, including the precious metals.”
Elsewhere in metals trading, October platinum PLV4, -0.49% fell 0.7% and September palladium PAU4, +0.79% rose 0.9%. High-grade copper for September delivery HGU4, -0.46% fell nearly 1.5 cents to $3.16 a pound.
