Investing.com - Gold futures declined during U.S. morning hours on Thursday, holding on to losses after data showed that the number of people who filed for unemployment assistance in the U.S. rose less-than-expected last week, while a U.S. government shutdown entered its third day.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,307.20 a troy ounce, down 1%.
Prices fell by as much as 1.4% earlier in the session to hit a daily low of USD1,302.30 a troy ounce. The December contract ended 2.69% higher on Wednesday to settle at USD1,320.70 a troy ounce.
Gold futures were likely to find support at USD1,278.20 a troy ounce, Wednesday's low and the weakest level since August 7 and resistance at USD1,337.80, the high from October 1.
The U.S. Department of Labor said earlier that the number of individuals filing for initial jobless benefits in the week ending September 28 increased by 1,000 to 308,000.
Jobless claims for the preceding week were revised up to a gain of 307,000 from a previously reported increase of 305,000. Analysts had expected U.S. jobless claims to rise by 6,000 to 313,000 last week.
A partial shutdown of U.S. federal government operations was expected to delay Friday's highly-anticipated non-farm payrolls report for September.
Gold traders have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Fed to reduce its bond purchases.
Last month the U.S. central bank took markets by surprise with a decision to keep its stimulus program on track, saying it wanted to see more evidence of a sustained economic recovery before tapering.
Prices surged on Wednesday as the U.S. dollar weakened amid fears that the government shutdown in the U.S. would curb the economic recovery and prompt the Federal Reserve to maintain its stimulus program for longer.
Investors continued to weigh the implications of a protracted U.S. government shutdown.
President Barack Obama met with Republican and Democratic leaders in Congress on Wednesday, although a solution still seemed unlikely.
Markets were also considering how the political deadlock in Washington will impact negotiations to raise the U.S. debt ceiling, which the U.S. Treasury Department has estimated will be reached by October 17.
Moody's Investors Service warned that a failure to raise the debt limit would result in a worse outcome for financial markets than a government shutdown.
Elsewhere on the Comex, silver for December delivery fell 1.5% to trade at USD21.57 a troy ounce, while copper for December delivery dropped 1.1% to trade at USD3.380 a pound.
In China, government data released earlier showed that the nation's non-manufacturing purchasing managers' index climbed to a six-month high of 55.4 in September from 53.9 in August.
The Asian nation is the world's largest copper consumer, accounting for almost 40% of world consumption last year.
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