Gold Drops Sharply Below $1260 as U.S. Dollar Rallies

Gold prices settled lower on Thursday as brighter prospects for the U.S. economy and the dollar dimmed the metal’s appeal.  Bullion got little impetus from the European Central Bank’s dramatic decision to cut three separate interest rates, as well as purchase asset-backed securities, in a bid to jumpstart Europe’s languid economy.

U.S. gold futures for December delivery ended the session $3.80 lower at $1,266.50 an ounce. Spot gold was last down 0.5 percent at $1,263 an ounce. The dollar index rose 1.2 percent against a basket of currencies.  The metal fell to a low of $1,261.19 on Wednesday, its weakest since mid-June, before closing with a small gain.

Gold, seen as an alternative investment during times of geopolitical and financial uncertainties, has gained about 5 percent this year amid tensions in Ukraine and the Middle East.  But bullion investors continue to worry over strong U.S. economic data and its impact on the dollar.


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