Gold prices tumbled Thursday after reports ahead of the U.S. labor market in the services sector and sent to investors buying dollar positions on expectations that the Federal Reserve continues to taper stimulus programs this month.
Gold and the dollar tend to trade the opposite of the other.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1, 371.40 during the afternoon U.S. dollars , up 1.34%.
Gold prices hit a session low of USD1, 365.00 a troy ounce and USD1, 399.40 a troy ounce.
Gold futures were likely to find support at USD1, 351.90 a troy ounce, the low of August 20 and resistance at USD1, 416.30 , Tuesday's high.
The December contract settled 1.56 % to USD1 , 390.00 a troy ounce on Wednesday.
The Institute for Supply Management reported earlier that its index of U.S. non-manufacturing purchasing managers reached a peak of 29 months from 58.6 in August from 56.0 in July.
Analysts had expected the index to fall to 55.0 last month.
Better than expected economic indicators in markets of production and labor have stimulated demand for the dollar as well, which is at the expense of gold.
The official data showed that U.S. factory orders fell 2.4 % in July, less than expected by 3.3% after a revised 1.6% increase the previous month decline.
The Labor Department , meanwhile , said the number of people claiming unemployment benefits in the week ending August 30 fell from 9000 to 323,000 , beating expectations for a decline in 2000.
Investors took in stride ADP report shows that 176,000 jobs were created in the U.S. private sector in August , less than an expected increase of 180,000 , after a revised 198,000 increase the previous month.
Rose made on feelings fed by the Federal Reserve could announce at its monetary policy meeting on 17-18 September , the decision to start to finish its USD85 billion in monthly purchases of bonds.
Monetary stimulus tools such as the purchase of assets weaken the dollar to stimulate recovery, which makes it attractive gold coverage, but talking to stop this type of ultra- accommodative monetary policy tends to send the dollar's rise and fall golden.