Gold slips as positive data bolsters hopes of economic recovery

A man counting gold bars.
Akos Stiller | Bloomberg | Getty Images

Gold prices fell to a near one-week low on Thursday, as positive economic data from the United States elevated hopes for a quick economic recovery, denting the safe-haven metal's appeal.

Spot gold was down by 0.6% to $1,930.58 per ounce, having earlier fallen to $1,926.99. U.S. gold futures dropped 1.7% to settle at $1,944.70.

A drop in jobless claims and positive manufacturing data early in the week are taking some shine off gold, said David Meger, director of metals trading at High Ridge Futures.

U.S. weekly jobless claims fell below 1 million last week for the second time since the pandemic started, but did not signal a strong recovery in the labor market.

Data this week boosted optimism about a steady recovery as new orders for U.S.-made goods increased more than expected in July, while U.S. manufacturing data showed activity accelerated to a near two-year high in August.

However, Federal Reserve Governor Lael Brainard on Tuesday said the U.S. central bank would need to roll out more stimulus to support an economy still suffering from the negative effects of a virus pandemic.

"The Fed governor's take on a move to provide more stimulus cements the fact that the economy is still in a crisis and the little fall in safe-haven assets like gold we see are mere consolidation," Meger said.

Investors now await the U.S. payroll figures on Friday.

On the technical front, "in the near term, gold may remain in a wide range with support around $1,910 and resistance around $1,985."said FXTM analyst Lukman Otunuga.