Gold, silver remain sharply lower after jobless claims data

San Francisco (Oct 31)   Gold and silver futures remained sharply lower on Thursday, after data showed that the number of people who filed for unemployment assistance in the U.S. fell broadly in line with market expectations last week, adding to speculation the Federal Reserve could start tapering its bond-buying program sooner-than-expected.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,327.60 a troy ounce during U.S. morning trade, down 1.6%.

Prices fell to a session low of USD1,322.60 a troy ounce earlier, the weakest level since October 22. The December contract ended 0.28% higher on Wednesday to settle at USD1,349.30 a troy ounce.

Gold futures were likely to find support at USD1,310.10 a troy ounce, the low from October 22 and resistance at USD1,361.70, the high from October 28.

Elsewhere on the Comex, silver for December delivery plunged 4.3% to trade at USD21.99 a troy ounce. Prices tumbled by nearly 5% earlier to hit a daily low of USD21.81 a troy ounce.

The U.S. Department of Labor said earlier that the number of individuals filing for initial jobless benefits declined by 10,000 to a seasonally adjusted 340,000 last week.

Analysts had expected U.S. jobless claims to fall by 11,000 to 350,000 last week from the previous week's total of 350,000.

Market players 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.

The central bank said on Wednesday that it would keep buying USD85 billion a month in mortgage and Treasury securities, as widely expected.

Fed officials stuck to the view that the economy is expanding "at a moderate pace" and said downside risks were diminishing, sparking speculation the central bank could start tapering stimulus at its December meeting.

Gold and silver prices have largely tracked shifting expectations as to whether the Fed would start tapering its USD85-billion-a-month asset-purchase program by the end of the year.

The U.S. dollar strengthened as traders reassessed their expectations regarding the duration of the Federal Reserve's bond-buying program.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.4% to trade at 80.09, the strongest level since October 17.

A stronger dollar reduces demand for raw materials as an alternative investment and makes dollar-priced commodities more expensive for holders of other currencies.