Investing.com - Gold prices eased further in Asia on Friday, driven by sentiment the dolar will move to further strength after the European Central Bank cut rates and that physical demand may wane.
On the Comex division of the New York Mercantile Exchange, Gold futures for December delivery traded at $1,258.80 a troy ounce, down 0.61%, after hitting an overnight session low of $1,267.60 and off a high of $1,277.90.
Overnight, gold prices moved lower after upbeat U.S. service-sector data fueled demand for the greenback, though a ECB decision to stimulate the economy cushioned losses by sending investors hedging the precious metal against a sliding euro.
The U.S. services sector grew at its strongest pace in August since 2005, data that boosted the dollar and sent gold prices dipping, as the two asset classes tend to trade inversely with one another.
The Institute for Supply Management reported earlier that its services index rose to 59.6 in August from 58.7 in July, far surpassing market forecasts for a downtick to 57.5.
A reading above 50 indicates expansion in the sector, and the index offset lackluster U.S. employment data.
The Labor Department reported that the number of individuals filing for first-time unemployment assistance in the U.S. last week rose by 4,000 to 302,000 from the previous week’s total of 298,000.
Analysts had expected jobless claims to rise by 2,000 to 300,000 last week.
Elsewhere, payroll processor ADP reported that its nonfarm payrolls report showed that the private sector added 204,000 jobs in August, missing expectations for jobs growth of 220,000.
News out of Europe cushioned losses.
The European Central Bank earlier trimmed its benchmark interest rate to a record-low 0.05% from 0.15%, surprising many market analysts who had expected no change.
The central bank also lowered its deposit facility rate to -0.20% from -0.10% previously and its marginal lending rate to 0.30% from 0.40%.
The euro extended losses after ECB President Mario Draghi said the bank will begin an asset-backed securities purchasing program to shore up the recovery and steer the continent away from deflationary decline.
Draghi did not say how much debt the ECB planned to purchase, as further details will emerge in October.
The ECB cut its forecast for growth this year to 0.9% down from 1.0% previously and cut the forecast for 2015 to 1.6% from 1.7%. The bank also lowered its inflation forecast for this year to 0.6% from 0.7% in June.
The news bolstered gold's appeal as a hedge to a sliding euro.
Silver for December delivery fell 0.47% at $19.048 a troy ounce. Copper futures for December delivery eased 0.03% at $3.149 a pound.