Gold futures slip as US dollar jumps

Gold futures on the COMEX division of the New York Mercantile Exchange slipped on Thursday as the U.S. dollar surged in the wake of the European Central Bank (ECB)'s unexpected rate cut.

The most active gold contract for December delivery fell 9.3 U. S. dollars, or 0.71 percent, to settle at 1,308.5 dollars per ounce. The contract gave back nearly all of the 9.7-dollar-an- ounce gain it witnessed Wednesday, when futures prices rebounded from a three-week low on a weak U.S. dollar.

Precious metals, such as gold, like all the other markets, came to life when the ECB surprised everyone with a 25 basis-point interest rate cut, market analysts say.

On Thursday, the ECB cut its key benchmark interest rate by a quarter of a percentage point to 0.25 percent. Following the decision, the euro slumped about 0.6 percent against the dollar. A stronger U.S. dollar tends to weigh on prices for dollar- denominated commodities, including gold.

Furthermore, a surprisingly good U.S. third-quarter gross domestic product figure also weighed on gold.

The United States expanded at an annual rate of 2.8 percent in the third quarter, the quickest pace in a year, the Commence Department said on Thursday. The pick-up in the U.S. growth will give the Federal Reserve policy makers more flexibility to curtail its quantitative easing policy.

Silver for December delivery fell 11.1 cents, or 0.51 percent, to close at 21.657 dollars per ounce.