NEW YORK (TheStreet) -- Gold prices were slipping on Thursday as dovish rhetoric from the European Central Bank was offset by a survey of economists that suggested the ECB will leave rates unchanged until the end of 2014.
Gold for June delivery at the COMEX division of the CME was off $7.60 to $1,466.10 an ounce. The gold price traded as high as $1,476 and as low as $1,458.80 an ounce, while the spot price was shedding $6.80, according to Kitco's gold index.
Dovish comments have provided support for gold since the beginning of May when the ECB cut its refinancing rate to 0.5% from 0.75%, and from ECB President Mario Draghi's comments that the central bank stands ready to act. But a monthly Bloomberg survey revealed that a median of 18 forecasts from economists called for no change to rates until the end of 2014.
"There seems to be a divide between policy-makers' comments and expectation," said Howard Wen, precious metals analyst at HSBC Bank USA.Should the ECB implement more quantitative easing, it would be positive for gold prices as market observes would view it as a surprise, Wen said. Silver prices for July delivery was off 5 cents to $23.88 an ounce, while the U.S. dollar index was adding 0.31% to $82.16. Also adding slight pressure to gold was a better-than-expected report on weekly initial jobless claims. The Labor Department reported Thursday that claims dropped by 4,000 to 323,000 in the week ended May 4. The four-week moving average dropped 6,250 to 336,750. Economists surveyed by Thomson Reuters were expecting weekly claims to rise to 335,000. Improving labor conditions typically weaken the price of gold because the Federal Reserve has closely tied maintaining its policy of a historically low federal funds rate to the unemployment rate. Should unemployment dip near 6.5% the Fed has said it would consider raising interest rates. An environment in which the Fed raises interest rates suggests that the central bank already would have started to scale back its current monetary stimulus programs. Traders and investors view global central bank easing as an inflationary burden, which makes gold an appealing asset hedge.
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