Investing.com - Gold fell back towards six-year lows on Thursday, after data showed the number of people who filed for unemployment assistance in the U.S. fell more than expected last week, remaining in territory usually associated with a firming labor market.
Gold for February delivery on the Comex division of the New York Mercantile Exchange tumbled $16.90, or 1.57%, to trade at $1,059.90 a troy ounce during U.S. morning hours. It earlier fell to $1,058.00, the lowest since December 3, when prices fell to a six-year low of $1,046.20.
The U.S. Department of Labor said the number of individuals filing for initial jobless benefits decreased by 11,000 last week to 271,000. Analysts expected jobless claims to fall by 7,000 to 275,000 last week.
First-time jobless claims have held below the 300,000-level for 40 consecutive weeks, which is usually associated with a firming labor market.
At the same time, the Federal Reserve Bank of Philadelphia said that its manufacturing index deteriorated to -5.9 this month from November's reading of 1.9. Analysts had expected the index to dip to 1.5 in December.
On the index, a reading above 0.0 indicates improving conditions, below indicates worsening conditions.
The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 98.96, after hitting highs of 99.05 overnight, the most since December 3, after the Federal Reserve raised U.S. interest rates for the first time in a almost a decade.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
The Fed hiked interest rates by 25 basis points to a range between 0.25% and 0.5% in a widely expected move following the conclusion of its policy meeting on Wednesday.
Commenting on the decision, Fed Chair Janet Yellen said that further rate hikes would be gradual and data dependent.
The yellow metal is on track to post an annual decline of 11% in 2015, the third yearly loss in a row, as speculation over the timing of a Fed rate hike dominated market sentiment for most of the year.
Rising interest rates historically have been bad news for gold, which can't compete with the higher interest rates offered by other assets.
Meanwhile, silver futures for March delivery slumped 26.3 cents, or 1.85%, to trade at $13.98 a troy ounce. Prices slumped to $13.62 earlier this week, a level not seen since August 2009.
Elsewhere in metals trading, copper prices dropped to two-week lows on Thursday, after the Federal Reserve's first rate hike in almost a decade pushed up the dollar, dampening demand for raw materials.