Worries euro zone may move swiftly against inflation undercuts metal
By Claudia Assis, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures traded lower Thursday after two consecutive record-breaking sessions, hampered by comments from the European Central Bank that it could move as early as next month to raise interest rates to quash inflation.
Gold for April delivery (GCJ11 1,421, -16.50, -1.15%) retreated $14.50, or 1%, to $1,423.10 an ounce on the Comex division of the New York Mercantile Exchange.
Gold closed at $1,437.70 an ounce, a record high, on Wednesday, helped by fears of inflation and lingering concerns about the Middle East and North Africa.
On Thursday, however, some of the inflation boost was leaving the trade, as European Central Bank President Jean-Claude Trichet warned about a possible interest-rate increase as early as April to prevent rising inflation.
Gold had reached its recent highs partly on fears of rampant inflation worldwide. Gold is considered a hedge against inflation because it holds to its intrinsic value, and it often trades higher when inflationary concerns are at the forefront.
His comments boosted the euro, which traded at its highest versus the dollar since November. Dollar edges lower on Trichet comments.
The ECB decided Thursday to leave its key interest rate unchanged at a record-low 1%.
Also on Thursday, investors weighed a report showing initial jobless claims in the U.S. at their lowest since 2008. See more about jobless claims.
U.S. productivity rose.
The positive macroeconomic data helped copper, with the March contract (HGH11 452.00, +4.00, +0.89%) up 5 cents, or 1%, to $4.53 a pound.
Silver tracked gold lower, leaving a three-decade high. Silver for May delivery (SIK11 3,433, -51.00, -1.46%) was off 48 cents, or 1.4%, to $34.35 an ounce. It closed at $34.83 an ounce on Wednesday.
