* ECB cuts deposit rate to -0.10 pct, refi rate to 0.15 pct
* Euro falls to 4-month low vs dollar, stocks climb 1 pct
* Draghi unveils package of stimulus measures for euro zone
(Releads, updates prices, adds comment)
By Clara Denina and Jan Harvey
LONDON, June 5 Gold jumped 1 percent on
Thursday, rising further from this week's four-month low, after
the European Central Bank cut interest rates to record lows and
its chief Mario Draghi unveiled a package of new stimulus
Dealers who had bet against gold in the run-up to the
announcement rushed to cover positions as the metal held above
$1,240 an ounce, traders said.
Spot gold was up 0.8 percent at $1,252.15 an ounce at
1308 GMT, off a high of $1,256.50. It earlier dipped as low as
$1,240.90, close to this week's four-month low of $1,240.61.
U.S. gold futures for August delivery were up 0.7
percent at $1,252.50 an ounce.
The ECB lowered the deposit rate to -0.1 percent, meaning it
will effectively charge banks for holding their money overnight.
It cut its main refinancing rate to 0.15 percent, and the
marginal lending rate - or emergency borrowing rate - to 0.40
Draghi later unveiled a package of measures to stimulate the
euro zone economy, saying the ECB will offer banks a targeted
long-term refinancing operation (LTRO) to persuade them to lend,
was preparing to purchase asset-backed securities and will
discontinue sterilising previous bond purchases.
"The market was short into the announcement, and with
quantitative easing arriving in the euro area, shorts are now
being reined in," Saxo Bank's head of commodities research Ole
Hansen said. "It has probably got another percent in it towards
$1,268 before resistance is met."
Gold tends to benefit from low interest rates and looser
monetary policy, which cuts the opportunity cost of holding
Hansen said gold's move in the opposite direction to the
euro, with which it usually trades in line, was unsurprising,
given the reasons for the euro's fall. "Interest rates will stay
lower for longer than previously expected," he said.
The euro hit a four-month low against the dollar and
European shares rose more than 1 percent after Draghi spoke. The
dollar index rose 0.2 percent, also benefitting from firm
U.S. borrowing costs.
The U.S. 10-year Treasury yields stood around
2.59 percent. Returns on U.S. bonds are closely watched by the
gold market, given that the metal pays no interest.
Markets were now eyeing Friday's U.S. nonfarm payrolls to
gauge the strength of the economy.
A Reuters survey of economists forecast that employers
probably added 218,000 jobs to their payrolls last month. While
that would be step down from April's robust 288,000 job gain, it
would still be above the average for the preceding six months.
"The metal may get a short-term boost if US employment data
this week give back some of the outsized gains of April but that
is widely anticipated and the gold market is not running that
heavily short, so we doubt that any rally will be sustained,"
Credit Suisse said in a note.
Among other precious metals, silver gained 1 percent
to $18.93 an ounce, while platinum was up 0.3 percent to
$1,435.80 an ounce and palladium rose 0.3 percent to
$836.22 an ounce.
South Africa's AMCU union has rejected a government wage
increase proposal aimed at ending a crippling five-month strike
by platinum miners, the Business Day newspaper reported on
South Africa's new mining minister Ngoako Ramatlhodi had
said on Wednesday that he hoped to resolve the strike this week.
(Additional reporting by A. Ananthalakshmi in Singapore;
editing by William Hardy and Jason Neely)