Gold turned lower on Thursday and retreated away from a recently-visited two-month high. February gold fell $7.90 to close the session at $860.60 an ounce. Gold had reached as high as $879.60 before turning lower.
The precious metal's hedge appeal declined as the U.S. dollar rebounded versus major rivals. After hitting a 2 1/2 month low of 1.4718 overnight, the dollar improved to 1.4250 against the euro. Similarly, the buck moved away from a 13-year low of 87.11 against the yen ahead of an expected interest rate cut by the Bank of Japan.
Crude oil prices plunged to a fresh 4 1/2-year low, further diminishing gold's hedge value. Light sweet crude for January delivery moved to $36.22 a barrel, down $3.84. Prices hit as low as $35.98 earlier in the session.
On the economic front Thursday morning, the Department of Labor released its report indicating that jobless claims fell to 554,000 from the previous week's revised figure of 575,000. Economists had expected jobless claims to slip to 558,000 from the 573,000 originally reported for the previous week.
Later, the Conference Board said Thursday that its index of leading economic indicators fell 0.4 percent for November. Economists had expected the measure to slip by 0.5 percent.
Meanwhile, a Federal Reserve Bank of Philadelphia report showed that index of activity in the sector improved to a negative 32.9 in December from a negative 39.3 in November, although a negative reading indicates a contraction in the sector. Economists had expected the index to fall to a reading of negative 40.5.
Gold soared to a two-month high on Wednesday as the U.S. dollar tumbled against other major currencies. February gold ended at $868.50, up $25.80 for the session. Prices climbed to $883.60 in electronic trading.
On Tuesday after the metal marked closed, the Federal Reserve established a target range for the federal funds rate from zero to one-quarter percent Tuesday, bringing the target to its lowest level in over 50 years. The highly unusual move of establishing a target range comes as U.S. policymakers face the most severe economic crisis since the Great Depression.
