Investing.com - Gold prices fell to a five-week low on Thursday, as the U.S. dollar advanced after the European Central Bank offered banks a new round of long-term loans, known as TLTROs, and pushed out the timing of its first post-crisis rate hike to next year.
Comex gold futures were down $3.25, or 0.25%, at $1,284.35 a troy ounce by 9:05AM ET (14:05 GMT), after falling as low as $1,281.35, its lowest level since Jan. 25.
Meanwhile, spot gold was down 0.2% at $1,283.90 per ounce.
While investors had long stopped pricing in an ECB rate hike this year, few were expecting the bank to change its forward guidance. The surprise caused the euro to fall after the announcement. It was last down 0.5% at $1.1246, the lowest since Feb. 15.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, jumped 0.4% to 97.24, the highest since Nov. 28.
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.
Data released earlier showed that the number of people who filed for unemployment assistance in the U.S. fell by 3,000 last week to 223,000. Economists had expected a figure of 225,000. The previous week's total was revised upward to 226,000.
The U.S. nonfarm payrolls report on Friday will provide further signals on the strength of the economy and how it would affect the Federal Reserve’s monetary policy.
Gold is highly sensitive to U.S. interest rates because higher rates increase the opportunity cost of holding non-yielding bullion and boost the dollar.
In other metals trading, silver futures were down 3.8 cents, or 0.25%, at $15.04 a troy ounce, the lowest since Dec. 27.
Meanwhile, palladium futures inched up 0.2% to $1,490.15 an ounce, while platinum fell 0.3% to $825.70 an ounce.
-- Reuters contributed to this report