Gold futures rose Thursday for the first time in four sessions, as investors bought the metal after it hit a five-week low in the previous day.
Limiting gold's gain, the U.S. dollar rose against the euro after the European Central Bank cut its key interest rate. Crude oil moved lower for a second day, reducing gold's appeal as a hedge against inflation.
Gold for February delivery was last up $9.70, or 1.2%, at $818.50 an ounce on the Comex division of the New York Mercantile Exchange. It settled at $808.80 Wednesday, the lowest closing price since Dec. 10.
"Players digested the near-term market fallout from the [ECB] rate cut as regards the U.S. dollar, the price of oil, and the outlook for commodities in general," said Jon Nadler, senior analyst at Kitco Bullion Dealers.
Helping give gold a boost was a string of bad economic news. Some investors buy gold as a safe have against economic troubles.
First-time applications for state unemployment benefits rose 54,000 to a seasonally adjusted 524,000 in the week ending Jan. 10, the Labor Department said Thursday. The four-week average of new claims fell 8,000 to 518,500 - a level that is 55% higher than the average during the same period in the prior year.
U.S. foreclosure filings in 2008 rose 81% from 2007 and tripled from 2006, RealtyTrac reported on Wednesday. A total of nearly 3.16 million foreclosure filings, were reported in 2008.
In the financial sector, J.P. Morgan Chase said Thursday that its fourth-quarter profit fell 77.6% amid continuing write-downs and a deteriorating consumer environment. See full story.
Meanwhile, the government is close to committing billions in additional aid to Bank of America Corp. to help the bank digest its acquisition of Merrill Lynch & Co., the Wall Street Journal reported late Wednesday.
ECB cuts rate
The ECB delivered another rate cut Thursday, dropping its benchmark lending rate by half of a percentage point to 2% in the face of a sharp and worsening recession. The cut matched expectations. See full story.
The U.S. dollar rose against the euro after the rate cut. A stronger dollar tends to put downward pressures on gold as it reduces gold's appeal as an alternative investment.
In other metals trading, March copper fell 0.4% to $1.4810 a pound, March silver rose 1.7% to $10.655 an ounce, April platinum dropped 1.3% to $924 an ounce, and March palladium fell 1.2% to $179.80 an ounce.
Holdings in the SPDR Gold Trust , the largest exchange-traded gold fund, totaled 790.65 tons Wednesday, up 3 tons from a day earlier, according to the latest data from the fund.
