Forexpros – Gold futures continued to come under heavy selling pressure during U.S. morning hours on Thursday, falling to the lowest levels of the day after a report showed that the number of people who applied for unemployment benefits in the U.S. fell slightly last week.
Gold traders continued to unwind bullish bets on the precious metal amid disappointment over the lack of aggressive monetary stimulus from the Federal Reserve.
Investors awaited the results of an audit of Spanish banks later in the day, as uncertainty over whether Madrid will need a full sovereign bailout persisted.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,584.35 a troy ounce during U.S. morning trade, tumbling 1.95%.
It earlier fell by as much as 2.1% to trade at USD1,583.65 a troy ounce, the lowest since June 11.
Gold futures were likely to find support at USD1,559.35 a troy ounce, the low from June 8 and near-term resistance at USD1,642.15, the high from June 6.
Gold prices fell to the lowest levels of the session after the U.S. Department of Labor said the number of individuals filing for initial jobless benefits last week fell by 2,000 to 387,000.
Gold traders continued to adjust positions after the Fed announced Wednesday that it was extending its current bond buying program, known as “Operation Twist”, until the end of the year and said that it was ready to take additional steps. The bond purchasing program had been due to expire at the end of this month.
Under Operation Twist, the Fed sells short-dated Treasury instruments and buys longer-dated Treasury’s in tandem with the aim of pushing down long-term interest rates.
The announcement disappointed market expectations for more aggressive measures to shore up growth in the world’s largest economy, following a recent string of weak U.S. data.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.4% to trade at 81.92.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal’s appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Gold gained as much as 15% earlier this year to hit USD1,790 an ounce after the Fed said in January it would keep interest rates near zero until at least late 2014 and indicated that it could introduce a fresh round of asset-purchases.
However, prices have lost almost 9% since late February, amid growing concerns the European debt crisis has been escalating, which has fueled demand for the yellow metal’s hedge, the greenback.
Meanwhile, Investors remained wary ahead of the outcome of an audit of Spanish banks later in the day, amid concerns that the results could show that a EUR100 billion bailout for the country’s banks agreed earlier this month would not be large enough.
Spain’s Treasury sold slightly more than the targeted amount of EUR2 billion at an action of government debt earlier in the session, but the country’s borrowing costs rose sharply.
The average yield on the five-year bond climbed to 6.07%, up from 4.96% at a similar auction last month.
Elsewhere on the Comex, silver for July delivery dropped 2.9% to trade at USD27.55 a troy ounce, while copper for July delivery fell 1.4% to trade at USD3.340 a pound.
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