Gold prices dropped on Thursday, but held above the key $1,000 per ounce mark. The metal's hedge appeal was reduced as the greenback rose against the euro. December-stamped gold fell to $1,000.70 per ounce, down $8.60 on the day. Prices had hit as low as $998.80. The dollar climbed to a fresh 2 1/2-week high against the euro, continuing its recent charge. The buck was level against the yen and sterling. Traders considered testimony from Federal Reserve Chairman Ben Bernanke, who cautioned the dollar's status as a global reserve currency may change in the long-term without bringing fiscal deficits back under control. On the economic front, the Institute for Supply Management said its main index of manufacturing activity slipped to 52.6 for September, down from a reading of 52.9 in the previous month. A Commerce Department report showed that construction spending increased by 0.8 percent in August compared to a revised 1.1 percent decrease in July. The increase surprised economists, who expected spending to fall 0.1 percent compared to the 0.2 percent drop originally reported for the previous month. The National Association of Realtors said its pending home sales index rose 6.4 percent to 103.8 in August from a reading of 97.6 in July. With the increase, the index rose to its highest level since March of 2007. Economists had been expecting a much more modest increase by the index of about 1.0 percent. The U.S. Labor Department announced that initial jobless claims rose to 551,000 for the week ended September 26. This was up 17,000 from the previous week's revised total of 534,000. A separate Commerce Department report showed that personal spending rose by 1.3 percent in August following an upwardly revised 0.3 percent increase in July. Economists had expected spending to rise 1.1 percent compared to the 0.2 percent growth originally reported for the previous month. On Friday, the Labor Department's big jobs report is due at 8:30 a.m. ET. Non-farm payrolls are expected to drop by 180,000 jobs, compared to 216,000 last month. The unemployment rate is expected to rise to 9.8% in September, up from 9.7% in August. At 10 a.m. ET, factory orders data is coming. A rise of 0.5% is projected for August, compared to a 1.3% rise in July.

Source