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Gold drops on upbeat U.S. data, Fed language

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Shutterstock photo - - Gold prices dropped on Thursday after upbeat U.S. data fueled growing expectations that the days of ultra-loose monetary policies that have supported the precious metal for years are coming to an end.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at 1,276.50 a troy ounce during U.S. trading, down 1.44%, up from a session low of $1,274.20 and off a high of $1,292.90.

The December contract settled down 0.12% at $1,295.20 on Wednesday.

Futures were likely to find support at $1,258.00 a troy ounce, the low from June 17, and resistance at $1,304.90, Monday's high.

The Federal Reserve released the minutes of its July policy meeting on Wednesday, and the document revealed that interest rates could come sooner rather than later if the labor market continues to recover.

The Fed is seen closing its monthly bond-buying program in October, and should the labor market improve, rate hikes could follow possibly earlier in 2015 than markets were originally expecting.

Loose U.S monetary policies, including several rounds of Fed asset purchases rolled out since the 2008 financial crisis, tend to bolster gold's appeal as a hedge to a weaker dollar.

Data released on Thursday confirmed market sentiments that the U.S. economy is close to standing on its own two feet with a monetary crutch.

The Federal Reserve Bank of Philadelphia said that its manufacturing index topped a three-year high of 28.0 this month from July's 23.9 reading. Analysts had expected the index to decline to 19.2 in July.

Separately, market research group Markit said that its preliminary U.S. manufacturing purchasing managers' index increased to a four-year high of 58.0 this month from a final reading of 55.8 in July. Analysts had expected the index to ease down to 55.7 in August.

Data also showed that U.S. existing home sales increased 2.4% to 5.15 million units last month from 5.03 million in June. Analysts had expected existing home sales to dip 0.4% to 5.02 million units in July.

Also on Thursday, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending Aug. 16 decreased by 14,000 to 298,000 from the previous week's revised total of 312,000.

Analysts had expected jobless claims to fall by 12,000 to 300,000 last week, and the weekly jobless claims report served as the indicator of choice that ensured gold prices remained deep into negative territory on Thursday.

Meanwhile, silver for September delivery was down 0.30% at $19.438 a troy ounce, while copper futures for September delivery were down 0.02% at $3.176 a pound. offers an extensive set of professional tools for the financial markets.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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