Gold Plummets On Upbeat Data, Ahead Of Fed Policy Meet

(RTTNews) - Gold futures plummeted over two percent to end at a near one-month low Thursday, on some upbeat initial jobless claims benefit data, raising fears of an imminent cut to the Federal Reserve's quantitative easing program. Gold was also impacted after having lost its safe haven appeal with little or no possibilities of an immediate U.S. military strike against Syria and as investors anxiously await the outcome of the Federal Open Market Committee policy meet next week.

In some significant economic news, unemployment benefits in the U.S. unexpectedly dropped to a seven-year low in the week ended September 7, with the decrease attributed largely due to technical issues in two states. The U.S. Labor Department linked the decline in jobless claims to the failure of two states to report all of their claims while upgrading computer systems.

Meanwhile, the Syrian crisis seem to be fizzling out with major nations looking forward to a diplomatic resolution to the issue, after Syria agreed to hand over their chemical weapons arsenal to Russia for destruction.

Gold for December delivery, the most actively traded contract, plunged $33.20 or 2.4 percent to close at $1,330.60 an ounce Thursday on the Comex division of the New York Mercantile Exchange.

Gold for December delivery scaled an intraday high of $1,366.20 and a low of $1,325.60 an ounce.

Yesterday, gold settled marginally lower with possibilities of a military strike against Syria fading out on its agreeing to a Russian proposal to hand over its chemical weapons for destruction. Investors also awaited further cues on the economy and the Federal Reserve plans for tapering its quantitative easing program at its policy meet next week.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, were unchanged at 917.13 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 81.45 on Thursday, down from 81.52 late Wednesday in North American trade. The dollar scaled a high of 81.70 intraday and a low of 81.36.

The euro traded higher against the dollar at $1.3315 on Thursday, as compared to its previous close of $1.3311 late Wednesday in North America. The euro scaled a high of $1.3324 intraday and a low of $1.3258.

In economic news from the U.S., the Labor Department said initial jobless claims dropped to 292,000, a decrease of 31,000 from the previous week's unrevised figure of 323,000. The decrease came as a surprise to economists, who had expected jobless claims to climb to 330,000. With the unexpected decrease, jobless claims fell to their lowest level since hitting 291,000 in the week ended April 1, 2006.

Separately, the Labor Department import prices were unchanged in August after ticking up 0.1 percent in July. Economists had been expecting import prices to rise by about 0.5 percent. Meanwhile, export prices fell by 0.5 percent in August following a 0.1 percent drop in the previous month. Export prices had been expected to edge up by 0.1 percent.

Elsewhere, euro zone industrial production declined at a faster-than-expected pace in July driven by widespread weakness across sub-sectors, official data showed. Industrial output fell 1.5 percent in July from a month ago, reversing a 0.6 percent rise in June, Eurostat reported. It was forecast to fall by 0.3 percent.