Investing.com - Gold prices edged lower on Thursday after data revealed consumer spending and personal incomes rose more than expected in March a day after the Federal Reserve said it was cutting the size of its monthly bond-buying program, which has supported gold since 2012.
Fed bond purchases bolster gold prices by weakening the dollar, as the two assets tend to trade inversely with one another.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at 1,283.90 a troy ounce during U.S. trading, down 0.93%, up from a session low of $1,277.40 and off a high of $1,293.10.
The June contract settled down 0.03% at $1,295.90 on Wednesday.
Futures were likely to find support at $1,268.60 a troy ounce, the low from April 24, and resistance at $1,306.50, Monday's high.
The Department of Labor reported earlier that the number of individuals filing for initial jobless benefits last week rose by 14,000 to 344,000 from the previous week’s upwardly revised total of 330,000.
Analysts had expected jobless claims to fall by 11,000 to 319,000.
Offsetting the disappointing jobless claims figures, the Commerce Department reported earlier that U.S. personal spending rose 0.9% in March from an upwardly revised 0.5% the previous month, beating expectations of 0.6%.
Consumer spending is the single biggest component of U.S. economic growth, accounting for as much as two-thirds of economic activity.
The report added that personal income rose 0.5%, beating expectations for a 0.4% increase.
Separately, the Institute for Supply Management said its manufacturing PMI rose to 54.9 last month from 53.7 in March, outpacing expectations for a 54.3 reading.
The reports came one day after data showed that the U.S. economy expanded at an annual rate of just 0.1% in the first quarter, well below forecasts for an expansion of 1.2%, though markets attributed the poor showing to rough winter weather that disrupted commerce earlier this year.
Despite the sharp slowdown in growth the Federal Reserve said Wednesday it would reduce its monthly bond purchases to $45 billion from $55 billion, as even though growth was nearly flat in the first quarter, the economy has been showing signs of gaining steam in recent weeks.
Bond purchases support gold prices by weakening the dollar, and Thursday's overall positive batch of indicators cemented views that the Fed will continue tapering its stimulus program as the year unfolds.
Investors were looking ahead to Friday’s April nonfarm payrolls report, which was expected to show that the recovery in the labor market was continuing, which further eroded the yellow metal.
Meanwhile, silver for July delivery was down 0.71% at US$19.038 a troy ounce, while copper futures for July delivery were unchanged at US$3.028 a pound.