Gold slumps as ECB dampens hope
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Xinhua, December 9, 2011
Gold futures on the COMEX Division of the New York Mercantile Exchange on Thursday slumped to the lowest level in more than a week, as the European Central Bank ( ECB) dampened investors' hope for bold moves toward a solution to the debt problem.
The most active gold contract for February delivery shed 31.4 U. S. dollars, or 1.8 percent, to 1,713.4 dollars per ounce, the lowest settlement since Nov. 29.
Market analysts said that although the European Union had acted to address the regional debt problem by cutting interest rate, no other significant measures, including bond purchasing program, were taken further, playing down the market confidence in settling the regional debt crisis.
The ECB on Wednesday lowered its key lending rate by a quarter point to one percent, which, however, was widely expected. But investors had been waiting for more drastic measures, such as expanded bond purchases, similar to the quantitative easing steps taken in the United States.
ECB president Mario Draghi said the interest rate cut was not unanimous and would not be drawn on whether there would be more cuts. Besides, Draghi said that the EU treaty prohibits "monetary financing," dampening hopes for bond purchasing measures.
EU leaders would start a crucial summit on Friday that investors hope will deliver a comprehensive solution to the region 's debt crisis.
Silver for March delivery lost 1.089 dollars, or 3.3 percent, to 31.538 dollars per ounce. Platinum for January delivery dropped 27.6 dollars, or 1.8 percent, to 1,494.4 dollars per ounce.
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