Gold and silver futures fell to four-week lows after a report showed fewer U.S. workers filed jobless claims, fueling concern that a firm labor market keeps the Federal Reserve on pace to raise interest rates this year.

Applications for unemployment benefits decreased by 8,000 to 276,000 in the week ended May 30, a Labor Department report showed Thursday. Holdings in exchange-traded products backed by gold extended losses Wednesday to the lowest since 2009.

The metal erased gains for the year as the jobs data added to signs that the economy is strong enough to sustain higher borrowing costs, paving the way for the Fed to increase its benchmark rate for the first time since 2006. Higher rates erode the appeal of gold, which doesn’t pay interest, as investors seek higher-yielding assets including new bonds.

Gold futures for August delivery fell 0.8 percent to settle at $1,175.20 an ounce at 1:44 p.m. on the Comex in New York. Earlier, the price touched $1,172.40, the lowest for a most-active contract since May 1.

Silver futures for July delivery fell 2.3 percent to $16.103 an ounce. The price touched $16.08, the cheapest since May 1.

Source : Bloomberg