Gold Ends Below $1,200 On Strong Dollar, ECB Move

(RTTNews) - Gold futures ended lower for a fourth straight session on Thursday, as the dollar strengthened against a basket of major currencies after the European Central Bank detailed its bond-buying program. Some disappointing economic data from the U.S. also impacted the precious metal, with investors awaiting the crucial U.S. jobs report due Friday.

ECB President Mario Draghi said the bank will purchase $66.3 billion worth of bonds each month beginning on March 9. The central bank previously indicated that the $1.1 trillion asset purchase program is expected to continue until September of 2016.

At its monetary policy meeting, the ECB maintained its interest rates unchanged for a fifth consecutive session. The ECB also raised its forecast for European economic growth in 2015 to 1.5 percent from 1 percent.

In a somewhat troubling sign for the labor market ahead of tomorrow's monthly jobs data, a Labor Department report on Thursday showed an unexpected increase in first-time claims for U.S. unemployment benefits in the week ended February 28. The claims rose to their highest level since the week ending May 17, 2014.

New orders for U.S. manufactured goods unexpectedly declined in January due mainly to a drop in non-durable goods orders that offset a rebound in durable goods orders, a Commerce Department report showed Thursday.

Meanwhile, China lowered its growth target for 2015 to 7 percent amid a challenging global environment and stressed the importance of reforms to build a moderately prosperous society, at its annual session of the National People's Congress in Beijing on Thursday.

Gold for April delivery, the most actively traded contract, dropped $4.70 or 0.4 percent to settle at $1,196.20 an ounce, on the Comex division of the New York Mercantile Exchange on Thursday.

Gold for April delivery scaled an intraday high of $1,208.90 and a low of $1,195.80 an ounce.

On Wednesday, gold ended at $1,200.90 an ounce, down $3.50 or 0.3 percent, as the dollar trended higher against a basket of some major currencies after some disappointing private jobs data from the U.S.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 760.80 tons on Thursday, from its previous close.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 96.38 on Thursday, up from its previous close of 95.91 on Wednesday in late North American trade. The dollar scaled a high of 96.59 intraday and a low of 95.84. The dollar touched its highest intraday in the last one year.

The euro trended lower against the dollar at $1.1028 on Thursday, as compared to its previous close of $1.1081 on Wednesday in late North American trade. The euro scaled a high of $1.1116 intraday and a low of $1.0990, its lowest in the last one year.

On the economic front, new orders for U.S. manufactured goods unexpectedly declined in January due mainly to a drop in non-durable goods orders that offset a rebound in durable goods orders, a report from the Commerce Department showed Thursday.

The report said factory orders edged down by 0.2 percent in January after tumbling by 3.5 percent in December. The modest drop surprised economists, who had expected orders to inch up by 0.2 percent.

U.S. labor productivity in the fourth quarter fell more than initially reported with output rising less than previously estimated, a Labor Department report said Thursday. The productivity for the fourth quarter dropped by a revised 2.2 percent compared to the previously reported 1.8 percent decrease. Economists expected productivity to fall by a revised 2.3 percent.

A Labor Department report on Thursday showed an unexpected increase in first-time claims for U.S. unemployment benefits in the week ended February 28. Initial jobless claims edged up to 320,000, an increase of 7,000 from the previous week's unrevised level of 313,000. Economists expected claims to drop to 295,000.

The European Central Bank will commence its bond purchases under an historic $1.1 trillion quantitative easing plan next week and expects the impact from it stimulus measures to return inflation to the euro area next year.

ECB President Mario Draghi said Thursday that the bank will start purchasing public sector bonds in the secondary market on March 9, under the QE scheme announced in January. Mario Draghi said the central bank will not buy bonds with yields lower than its deposit rate of negative 0.2 percent.

Earlier in the day, the ECB left interest rates unchanged for a fifth consecutive session after its meeting in Nicosia, Cyprus.

Meanwhile, the Bank of England also kept its key rate unchanged at a historic low of 0.50 percent. The central bank has persisted with the low rate at every policy meeting since March 2009, when the rate was cut to confront recession at the peak of the financial crisis.

From Asia, China lowered its growth target for 2015 amid a challenging global environment and stressed the importance of reforms to build a moderately prosperous society, at its annual session of the National People's Congress in Beijing on Thursday. Premier Li Keqiang said the government aims to achieve about 7 percent economic growth in 2015.

In 2014, the government had targeted about 7.5 percent growth, and achieved 7.4 percent, which was the weakest expansion since 1990.