Futures & Commodities

Gold ends near 6-week lows, posts 3% monthly loss

Reuters with CNBC
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Gold settled near a six-week low on Thursday, ignoring sharp losses in the S&P 500 equities index, as strong U.S. wage growth data and signs of an improving job market reduced the need for safe-haven buying.

Bullion is on track to drop more than 3 percent for July, its second monthly loss, as the Federal Reserve's continued the reduction of its bond-buying stimulus and a better U.S. economic outlook decreased the metal's appeal as a hedge.

The price of gold came under pressure after U.S. data showed labor costs recorded their biggest gain in more than 5-1/2 years in the second quarter, bolstering the economy's outlook.

Chart: Precious Metals

for December delivery fell by $13.80 lower at $1,281.70 an ounce, down 3.4 percent on the month. Spot gold was last trading down 0.9 percent at $1,283 an ounce, having hit its lowest since June 19 at $1,281.50 an ounce earlier.

U.S. stocks slumped in a broad decline, with the S&P 500 falling below a key support at its 50-day moving average. Gold has largely moved in inverse correlation with the equities market so far this year.

"Even the S&P is coming off, nothing has signalled the gains in equity markets are going to slow down, so there is no immediate need for gold right now," said Thomas Capalbo, precious metals trader at brokerage Newedge.

The metal was on track for a 3.3 percent drop for the month, reversing a gain of around six percent in June, when geopolitical tensions between the West and Russia over Ukraine triggered buying.

Is gold in serious trouble?
Is gold in serious trouble?

Gold prices were also dragged lower as U.S. crude oil tumbled to a more than four-month low under $10 a barrel due to a shutdown in a key refinery in Kansas that consumes the crude oil.

Thursday's data also showed a continued strengthening of U.S. labor market conditions even though the number of Americans filing new claims for unemployment benefits rose last week.

Gold investors are now digesting news that Argentina defaulted for the second time in 12 years.

The next market focus will be U.S. nonfarm payrolls data due on Friday, which is expected to show that U.S. employers added 233,000 new jobs in July.

--By Reuters with CNBC. For more information on precious metals, please click here.