Gold and silver reversed course and were heading lower Thursday morning in the wake of higher-than-expected weekly jobless claims and a sharp drop in consumer price inflation (CPI).

Spot gold was down 0.8% lower as of 10:56 a.m., bid at $1,616.80 an ounce. The morning high reached $1,629.20, and the low $1,608.80, according to Kitco market data. The London afternoon reference price was fixed at $1,613.50, $6 an ounce lower than Wednesday’s price fixing.

Spot silver was down 1.56%, bid at $28.41. The morning high thus far was $29.13 and the low $28.13. The London a.m. reference price was fixed at $28.88, one cent higher than Wednesday’s reference price.

Seasonally adjusted weekly claims for unemployment insurance rose unexpectedly last week, as 6,000 more American workers, a total of 386,000, filed for benefits, the Labor Dept. reported. The less volatile four-week moving average rose 3,500, to 382,000.

Disinflationary and deflationary pressures were evident in today’s other economic reports. U.S. CPI fell sharply, dropping 0.3%, in May from April, its first decline in two years and the largest since December 2008, the Commerce Dept. reported. That, combined with a 0.1% increase in average hourly wages, led American workers’ inflation-adjusted earnings to increase 0.3% in May. Lower gasoline prices, which dropped 6.8%, accounted for most of the CPI’s decline.

Lower oil prices were the biggest factor in 17-nation eurozone consumer price inflation hitting a 15-month low of 2.4% in May, down from 2.6% in April, Eurostat reported.

Spanish bond yields continued to rise to their highest levels since the euro’s introduction in 1999, with the benchmark 10-year Spanish Treasury’s yield breaching 7%. Moody’s downgraded Spain’s credit rating three notches, to just above junk status yesterday.

Italy had to piece significantly higher interest of 5.3%, 6.13% and 6.1% to auction off €4.5 billion ($5.625 billion) of 3-year notes, 10- and 15-year bonds, respectively.

Gold bullion spiked higher in London morning trading Thursday, BullionVault reported, hitting a weekly high of $1,627 an ounce after today’s reports on the U.S. economy were released.

“Once there’s evidence that the policymakers on the monetary side are going to have to release stimulus, we should see rising interest in gold and silver,” BullionVault quoted Jeremy Friesen, Hong Kong-based commodity strategist at Société Générale. “We feel that [a third round of quantitative easing] is still unlikely at present,” countered Marc Ground, commodities strategist at Standard Bank.

Gold and silver trusts were headed lower in U.S. stock exchange trading.

The SPDR Gold Trust (NYSE:GLD) was showing losses of less than 0.1%.
The iShares Gold Trust (NYSE:IAU) was down around 0.1%.
The iShares Silver Trust (NYSE:SLV) was some 1.4% lower.

Gold and silver mining ETFs were also showing losses in Thursday morning trading.

The Market Vectors Gold Miners ETF (NYSE:GDX) was down around 0.4%.
The Market Vectors Junior Gold Miners ETF (NYSE:GDXJ) was around 0.15% lower.
The Global X Silver Miners ETF (NYSE:SIL) was down around 0.1%.

Gold mining shares were showing morning losses, Eldorado Gold and Kinross Gold breaking ranks.

Agnico-Eagle Mines (NYSE:AEM) was down some 1.6%.
Barrick Gold (NYSE:ABX) was around 0.05% lower.
Eldorado Gold (NYSE:EGO) was up around 0.9%.
Goldcorp (NYSE:GG) was some 0.4% lower.
Kinross Gold Corp. USA (NYSE:KGC) was up around 1.8%.
Newmont Mining (NYSE:NEM) was showing losses of around 0.3%.
NovaGold Resources (NYSEAMEX:NG) was down some 0.3%.
Yamana Gold (USA) (NYSE:AUY) was around 0.55% lower.

Silver mining shares were mixed to lower, with Coeur d’Alene Mines and Silver Wheaton showing gains.

Coeur d’Alene Mines (NYSE:CDE) was up around 0.3%.
Hecla Mining (NYSE:HL) was down between 0.2% and 0.4%.
Pan American Silver (NASDAQ:PAAS) was around 0.8% lower.
Silver Wheaton (NYSE:SLW) was around 1% higher.
Silver Standard Resources (NASDAQ:SSRI) was down around 0.8%.

As of this writing, Andrew Burger did not hold a position in any of the aforementioned securities. Adrian Ash of BullionVault contributed to this report.