Investing.com -- Gold plunged more than $30 on Thursday dropping below $1,200 an ounce, as a raft of stronger than expected U.S. economic data fueled speculation that the Federal Reserve could be more hawkish than previously indicated on the timing of an interest rate hike.
On the Comex division of the New York Mercantile Exchange, gold for June delivery fell $30.10 or 2.49% to 1,179.90. Gold futures inched up to a session-high of $1,207.40 in European afternoon trading, before encountering a freefall just after the opening of U.S. markets. With the sell-off, gold reversed all of its gains from Monday when it soared more than 2.35% to 1,203.20.
During a volatile stretch over the last week, gold futures have ended the session up or down by at least 1.35% in four of the last seven trading days. On Thursday morning, the U.S. Department of Labor said initial jobless claims for the week that ended April 25, fell by 34,000 to a 15-year low of 262,000. Analysts had forecasted a dip of 6,000 for the week. It marked the lowest level since April, 2000. The four-week average for initial claims declined by 1,250 to 283,750, slightly lower than its level a month before.
On Wednesday, the Federal Open Market Committee indicated in a rate statement that it wanted to see improvements in the labor market before it decides to raise rates for the first time in nearly a decade.
Separately, the Institute of Supply Management said its Chicago Purchasing Managers Index rose by 6.0 points for the month to 52.3, up from 46.3 in March. New orders soared 12.8 points to 55.1, its highest reading since January and largest monthly increase in more than 30 years. Analysts had expected the index to increase to 50.0 for the month of April.
U.S. personal spending, meanwhile, rose by 0.4% for the month slightly below expectations of a 0.5% gain. Analysts had forecast a 0.2% in personal spending in April.
The Fed removed all calendar references to the timing of an interest rate hike on Wednesday, opting instead to take a data-driven approach. Moving forward, the Fed said it will take into account labor market conditions, inflationary pressures and expectations of international financial developments when it decides on the timing of a rate increase.
While the Fed previously indicated that it could raise its benchmark Federal Funds Rate from the current level of zero to 0.25% in June, it has become increasing likely that the U.S. Central Bank could delay the rate hike until September or December, following weeks of soft economic data since its FOMC meeting in March.
Gold, which is not attached to dividends or interest rates, struggles to compete with high-yield bearing assets in periods of rising interest rates.
Elsewhere, silver for July delivery plummeted 0.674 or 4.04% to 16.032 .
Copper for July delivery, meanwhile, rose 0.077 or 2.76% to 2.876 a pound.