Improving economic data has increased bets that the Federal Reserve could hike interest rates as soon as December pushed gold exchange traded funds down toward their long-term trend.
On Thursday, the SPDR Gold Shares (NYSEArca: GLD) fell 0.9%, iShares Gold Trust (NYSEArca: IAU) dropped 1.1% and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) decreased 0.9% as Comex gold futures declined 1.1% to $1,254.8 per ounce.
The three gold ETFs were testing their long-term support at the 200-day simple moving average on Thursday. However, technical traders may have also noticed that the gold ETFs were trading in oversold levels as indicated by their relative strength index.
The number of Americans applying for first-time unemployment benefits dipped toward a four-decade low last week ahead of Friday’s closely watched jobs data, the Wall Street Journal reports.
The strengthening employment conditions would support the argument for a Fed interest rate hike in December, which would diminish the appeal of hard assets like gold that struggle against yield-bearing securities when borrowing costs rise.
Precious metals have been under pressure over the past week as hints of an improving economy and a number of hawkish statements from Fed officials raised the prospect of a tightening monetary policy.