Gold price drops sharply to USD 1185.8/Oz...and continues falling

London (Apr 30)  Gold prices fell to a low of USD 1185.8/OZ from USD 1204/Oz levels after the sharp drop in the weekly jobless claims in the US triggered a wave of buying in the US dollar.

Gold: Trades below 50-DMA

The metal currently trades below its 50-DMA located at USD 1189.37/Oz levels. Gold, which is inversely related to the rate hike expectations, took a beating after the labor department data showed the initial jobless claims in the last week fell by 34K to 262K in the week ended April 25, the lowest since April 15, 2000.

Following the upbeat data, the USD index was pushed higher to 95.44 from the pre-data level of 94.71. Consequently, the metal fell to trade 2.05% lower for the day. Meanwhile, the personal spending and income report was largely ignored since it was a part of the first quarter GDP released on Wednesday.

Gold Technical Levels

The immediate support is located at 1183.7 (Apr. 14 low), under which losses could be extended to 1175.00 (Apr. 24 low). On the flip side, a break above 1189.37 (50-DMA) could see the metal re-test its 10-DMA at 1194.27.

UPDATE: By 10:25am EST spot gold tumbled $24 to $1180, while silver was down nearly 4% to $15.91.

Source: FXstreet