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Gold ends under $1,600 as Draghi offers no plan

SAN FRANCISCO (MarketWatch) -- Gold futures on Thursday extended losses into a third session, slipping under $1,600 an ounce as European Central Bank President Mario Draghi failed to present any immediate steps to counter Europe's sovereign debt crisis.

Gold for December delivery (GCZ2) , the most active contract, settled $16.60 lower, or 1%, to end at $1,590.70 an ounce on the Comex division of the New York Mercantile Exchange. That was gold's lowest settlement and the first under $1,600 in a little over a week.

Gold was under pressure as a few disappointed investors who had gone long prior to this week's central-bank meetings have left the trade, said James Moore, an analyst with thebulliondesk.com in the U.K.

Draghi "failed to take any action, adding doubts into the market," he said.

Gold had gained earlier, overcoming headwinds after U.S. Federal Reserve Chairman Ben Bernanke also disappointed markets and did not hint at any additional stimulus measures on Wednesday.

Draghi had fueled expectations of bold action last week, pledging his commitment to keep the currency bloc together.

At a news conference earlier Thursday, Draghi revealed no immediate details as to what he'd do to support that pledge.

He said no country in the euro zone had asked for support from Europe's bailout fund and there wasn't ground to take action.

'On the defensive near term'

"Although gold may stay on the defensive near term, we believe any further weakness is likely to be short-lived, as investors may shift focus to the next [Federal Open Market Committee] meeting in September," said James Steel, an analyst at HSBC Securities.

The European Central Bank and the Bank of England both left key rates unchanged Thursday. Markets had awaited Draghi's news conference with hopes of an announcement about buying bonds in the embattled euro-zone nations of Spain and Italy.

Several analysts were also hoping the People's Bank of China would lower the reserve-ratio requirement for banks sometime soon to ease liquidity for the No. 2 global economy.

Friday's U.S. employment data will be key, Moore said. Even a positive number could be interpreted as delaying more U.S. stimulus and thus could lead to a drop in gold prices, he said.

"There's the threat of a deeper correction for gold," Moore added.

The broader suite of metals futures tracked gold lower on Thursday.

September silver (SIU2) traded 54 cents lower, or 2%, to $27 an ounce.

September copper (HGU2) declined 8 cents, or 2.5%, to $3.29 a pound.

Palladium for the same month's delivery (PAU2) was off $14.75, or 2.5%, to $567.85 an ounce.

October platinum (PLV2) lost $13.50, or 1%, to finish at $1,387.80 an ounce.