Gold futures ended lower on Thursday, as the dollar strengthened against some select currencies following the European Central Bank's unexpected decision to slash its key interest rate to a new record low to boost economic growth. Gold prices were also impacted after some better than expected third quarter U.S. gross domestic product growth and a decline in initial jobless claims.
The European Central Bank surprisingly cut its key interest rate to a new record low, having left it unchanged for five successive months. The bank slashed the main refinancing rate by 25 basis points to a record low 0.25 percent. Previously, the bank slashed the rate by a quarter-point in May, which was the first reduction in nine months.
Economic activity in the U.S. grew by more than anticipated in the third quarter, according to a report released by the Commerce Department on Thursday. First-time claims for U.S. unemployment benefits fell for the fourth consecutive week in the week ended November 2, with claims coming in almost in line with economist estimates.
Gold for December delivery, the most actively traded contract, dropped $9.30 or 0.7 percent to close at $1,308.50 an ounce Thursday on the Comex division of the New York Mercantile Exchange.
Gold for December delivery scaled an intraday high of $1,326.00 and a low of $1,296.00 an ounce.
Yesterday, gold settled higher with the dollar weakening against some major currencies even as investors awaited the upcoming jobs data and further clues as to when the Federal Reserve will begin tapering its quantitative easing program.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, edged up to 868.42 tons from 866.32 tons.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.90 on Thursday, up from 80.51 late Wednesday in North American trade. The dollar scaled a high of 81.46 intraday and a low of 80.44.
The euro traded lower against the dollar at $1.3427 on Thursday, as compared to its previous close of $1.3514 late Wednesday in North America. The euro scaled a high of $1.3529 intraday and a low of $1.3298.
In economic news from the U.S., the Labor Department said initial jobless claims dropped to 336,000 in the week ended November 2, a decrease of 9,000 from the previous week's revised figure of 345,000. Economists expected claims to dip to 335,000 from the 340,000 originally reported for the previous week.
Separately, the Commerce Department said U.S. gross domestic product rose by 2.8 percent in the third quarter compared to economist estimates for an increase of 2.0 percent. GDP growth accelerated from the 2.5 percent increase in the second quarter, reflecting a deceleration in imports and accelerations in private inventory investment and state and local government spending.
From the eurozone, Germany's industrial production declined 0.9 percent in September from August, data from the Federal Ministry of Economics and Technology showed. Production was forecast to remain flat in September after rising by revised 1.6 percent in August. Production excluding energy and construction dipped 1.1 percent and construction output decreased 1.8 percent.
Elsewhere, the Bank of England held its interest rates at record low 0.50 percent and GBP 375 billion quantitative easing.
by RTT Staff Writer
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