Gold futures inch higher after jobless claims hit 5-week peak

Investing.com - Gold prices inched higher on Thursday, after data showed that the number of people who filed for unemployment assistance in the U.S. last week rose to a five-week peak, dampening optimism over the health of the labor market.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery tacked on 70 cents, or 0.06%, to trade at $1,187.20 a troy ounce during U.S. morning hours. Prices were trapped in a range between $1,185.50 and $1,192.40.

Futures were likely to find support at $1,181.00, the low from May 12, and resistance at $1,208.90, the high from May 26.

The U.S. Department of Labor said earlier that the number of individuals filing for initial jobless benefits last week rose by 7,000 to 282,000 from the previous week’s total of 275,000. Analysts had expected initial jobless claims to fall by 5,000 to 270,000 last week.

On Wednesday, gold hit $1,183.90, the lowest level since May 12, before ending at $1,186.50, down $1.30, or 0.11%, as the U.S. dollar rallied amid speculation the Federal Reserve was on track to raise interest rates in September.

Economic data released in the past week, including reports on inflation, new home sales, business investment and consumer confidence all indicated that the economy is gaining momentum after a slowdown in the first quarter, supporting the case for higher interest rates later this year.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

Also on the Comex, silver futures for July delivery inched up 6.5 cents, or 0.39%, to trade at $16.71 a troy ounce. Silver hit $16.58 on Wednesday, a level not seen since May 13, before closing down 9.9 cents, or 0.59%, at $16.64.

Elsewhere in metals trading, copper for July delivery shed 0.3 cents, or 0.12%, to trade at $2.765 a pound. On Wednesday, prices slumped to $2.758, the weakest level since April 28, before settling at $2.768, down 0.9 cents, or 0.34%.

In the currency market, the dollar rose to 124.30 against the yen, the most since June 2002, boosted by expectations that the economic recovery in the U.S. would accelerate the timeline for higher interest rates.

Meanwhile, the euro gave up earlier gains to trade near a one-month low against the greenback after European officials played down suggestions of a deal between Greece and its creditors, saying negotiators still had much work to do before reaching an agreement.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.35% at 97.68, close to Wednesday's five-week highs of 97.88.