NEW YORK (TheStreet) -- TheStreet's Joe Deaux spoke to Jim Wyckoff, senior analyst at Kitco.com, about reaction in the gold market to the European Central Bank's change in monetary policy.
The ECB surprised economists by cutting interest rates to 0.25% from 0.5%, which weighed on gold when coupled with stronger-than-expected third-quarter GDP.
Many market participants expected gold to have a bullish response to the ECB's form of easing. However, Wyckoff said the rate cut instantly caused the euro to plunge, allowing the U.S. dollar index to move higher. A higher U.S. dollar generally means lower gold prices.
On Friday, the nonfarm payrolls report will be released, and he suggested the results could continue gold's selloff into tomorrow.
He concluded that a better-than-expected labor report might cause market participants to expect the Federal Reserve to taper sooner rather than later, which would have an immediate negative effect on gold prices.
-- Written by Bret Kenwell in Petoskey, Mich.