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1st LD Writethru: Gold up on weaker U.S. dollar, ECB rate cut

Xinhua, December 4, 2015 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange rose Thursday as the U.S. dollar fell in the wake of a meeting of the European Central Bank at which the bank decided to make a less-than-expected cut to interest rates.

The most active gold contract for February delivery rose 7.4 U.S. dollars, or 0.70 percent, to settle at 1,061.20 dollars per ounce.

Gold was given support as the ECB cut interest rates to negative 0.3 and extended its 60 billion euro bond purchasing program to stimulate the eurozone economy. However this was less stimulus and a smaller rate cut than originally expected by investors, so euro climbed sharply against the U.S. dollar after the U.S. dollar reached multi-year highs in preparation for this ECB meeting.

The U.S. Dollar Index fell sharply by 2.22 percent to 97.80 as of 1900 GMT. The index is a measure of the dollar against a basket of major currencies. Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors holding other currencies.

Analysts note that the ECB has done the exact opposite of what the U.S. Federal Reserve is about to do, as the Fed is preparing to raise rates. The market has now fully factored in the expected December rate hike, and that the market is now unsure of the timing for the next rate hike.

The jobless claims report released by the U.S. Department of Labor Thursday was in line with expectations as initial jobless claims rose by 9,000 to 269,000 during the week of Nov. 28, but analysts note that the numbers remain near historic lows, and may further raise expectations for the Friday employment report, which will likely have market-moving implications, as both the ADP report released Wednesday and the aforementioned jobless claims report show continuing positive trends in the labor market.

Silver for March delivery added 6.8 cents, or 0.49 percent, to close at 14.077 dollars per ounce. Platinum for January delivery rose 15.1 dollars, or 1.81 percent, to close at 847.50 dollars per ounce. Endit