Gold prices slipped on Thursday morning as stock markets improved around the globe, reducing the appeal of the hedge investment.

June gold dropped to $905.70 per ounce, down $22.00 on the day. Prices slipped as low as $904.20 in early trading.

U.S. stocks rallied in the opening minutes of trading, reflecting some optimism about the outlook for the economy. Markets in Europe and Asia also rallied.

A Labor Department report showed that initial jobless claims rose to 669,000 from the previous week's revised figure of 657,000. Economists had expected jobless claims to edge down to 650,000 from the 652,000 originally reported for the previous week.

The U.S. dollar weakened against the euro, which firmed up across the board. The European Central Bank on Thursday lowered its key interest rate by 25 basis points to a new low of 1.25%, defying expectations for a larger reduction of 50 basis points.

On Wednesday, the most-actively traded June gold contract rallied to $927.10, up $2.10 for the session. Prices hit as low as $927.50 in the early going. Gold for immediate delivery closed at $926.10, up $3.50.

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