Investing.com - Gold prices tumbled along with the euro on Thursday, after the European Central Bank cut interest rates across the euro zone to new record lows and boosted its quantitative easing program.
The euro tumbled 1.5% against the dollar to the lowest level since early January, while the dollar index, which measures the greenback's strength against a basket of other major currencies, rallied more than 1% to hit a one-week high.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
The ECB said it was lowering its benchmark interest rate to a record-low 0.0% from 0.05%, surprising market players who were expecting no change. The central bank also cut its deposit facility rate to -0.4% from -0.3%, in line with market expectations. Meanwhile, the central bank reduced its marginal lending rate to 0.25% from 0.30%.
The ECB also said it was to increase the size of its monthly quantitative easing program to approximately €80 billion from the current €60 billion, starting in April, with investment-grade bonds added to the mix of assets eligible for purchase.
The central bank also announced new series of four targeted longer-term refinancing operations to be launched in June.
Gold for April delivery on the Comex division of the New York Mercantile Exchange shed $7.40, or 0.59%, to trade at $1,250.00 a troy ounce by 13:45GMT, or 8:45AM ET, after falling by as much as 1.3% to a session low of $1,237.50.
Meanwhile, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits decreased by 18,000 last week to hit a five-month low of 259,000. Analysts expected jobless claims to fall by 2,000 to 275,000 from the previous week’s total of 277,000.
First-time jobless claims have held below the 300,000-level for 52 consecutive weeks, which is usually associated with a firming labor market.
Elsewhere in metals trading, copper futures eased down 0.8 cents, or 0.38%, to $2.224 a pound, as investors digested another round of Chinese economic data.
The National Bureau of Statistics reported earlier that China’s consumer price index rose to a six-month high of 2.3% in February from a year earlier, above forecasts for an increase of 1.9% after a 1.8% rise in January.
The producer price index fell 4.9% on a year-over-year basis, compared to a decline of 5.3% in January, the agency said.
The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.