Gold Futures Snap 3-day Winning Streak, Settle Modestly Lower

Despite the dollar's continued slide against major currencies, gold prices snapped a three-day winning streak and edged lower on Thursday with traders digesting the monetary policy announcements from the Bank of England and the European Central Bank.

The dollar index slipped to 95.24, losing more than 0.7%.

Gold futures for April ended lower by $6.20 or about 0.3% at $1,804.10 an ounce.

Silver futures for March ended lower by $0.332 or about 1.5% at $22.375 an ounce, while Copper futures for March settled at $4.4710, down $0.0250 or 0.6% from the previous close.

The Bank of England's Monetary Policy Committee today decided to increase the key interest rate by 0.25% to 0.5%, and signaled 'modest tightening' in the months ahead. While five members including Governor Andrew Bailey sought 25 basis points hike, other four members of the panel voted for a bigger 50 basis point increase.

The bank had raised its rate by 0.15 percentage points at its December meeting, which was the first such move since August 2018. The bank said it intends to reduce its holdings of government bonds in a gradual and predictable manner.

The European Central Bank left its key interest rate and forward guidance unchanged. The main refinancing rate thus remains at zero, the deposit rate at -0.50% and the marginal lending rate at 0.25%.

The bank expects the key ECB interest rates "to remain at their present or lower levels until it sees inflation reaching 2%....that realized progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilizing at 2% over the medium term."

As announced in December, the bank said it will discontinue purchasing assets under its Covid-19 pandemic stimulus scheme at the end of March.

Data from the Labor Department showed a modest decrease by first-time claims for U.S. unemployment benefits in the week ended January 29th.

The report showed initial jobless claims dipped to 238,000, a decrease of 23,000 from the previous week's revised level of 261,000. Economists had expected jobless claims to edge down to 245,000 from the 260,000 originally reported for the previous week.

Markets now look ahead to Friday's closely-watched jobs report, which includes both public and private sector jobs.

Economists expect U.S. employment to rise by 150,000 jobs in January after an increase of 199,000 jobs in December. The unemployment rate is expected to hold at 3.9%.

A report from the Commerce Department showed factory orders fell by 0.4% in December after surging by an upwardly revised 1.8% in November. Economists had expected factory orders to dip by 0.2% compared to the 1.6% jump originally reported for the previous month.

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