Gold Slips 1% as Dollar Bounces on European Rate Move

From Chris Mullen at GoldSeek.com...

Gold rose another $11 to $878.45 early in London on Thursday before it fell off rather markedly in morning New York trade.

Gold Prices dropped as low as $848.65 by a little before noon EST, but then rallied over $10 from that low in the last hour and a half of trade to end with a loss of 0.95%.

Oil fell over 9% to a new four-and-a-half-year low at as low as $35.98 as traders continue to worry about further demand destruction and question whether or not OPEC will actually cut production as much as they have pledged. The January crude futures contract expires Friday.

The US Dollar index meantime rebounded from its recent huge losses after the European Central Bank cut its deposit rate but raised its lending rates.

In the wake of the US Federal Reserve's record-low rates set Tuesday, the ECB cut its official deposit rate by 50 basis points to 1% below the key rate, and raised its marginal lending rate by 50 basis points to 1% above the key rate.

Its benchmark repo rate – against which it lends cash in exchange for government bond – remains unchanged at 2.5%.

US Treasury bonds rose yet again as the Dow, Nasdaq, and S&P eventually fell rather noticeably on worries over the economy and whether or not the Fed's amazing recent action will be effective.

Silver rose 5 cents to $11.46 in early London trade and dropped as low as $10.972 in New York before it also bounced back higher in late trade, but it still ended with a loss of 2.54%.

The Gold Price in Euros slipped to €600, platinum lost $2.50 to $856.50, and copper fell over seven cents to about $1.27.

Gold and silver equities fell for most of the day and ended with about 7% losses.

Initial jobless claims for last week showed a slight drop, while the Leading Indicators report picked up but remained negative. The Philly Fed's index of economic activity rose to -32.9 from -39.3.

There are no major US economic reports due out Friday.