Gold prices fell Thursday as the European Central Bank head tamped down hopes of more government bond buying, hammering the euro and boosting the dollar.

While the ECB announced an expected rate cut Thursday, ECB President Mario Draghi said the bank was not inclined to buy more bonds of debt-chocked Eurozone nations, an announcement that stunned investors.

This is big -- a lot of people, stocks, bonds, currencies, had been counting on the ECB and (Draghi's) basically pulled the rug out from under the market, Brian Dolan, chief strategist at Forex.com in Bedminster, N.J., told Reuters. There's a sense of shock right now.

The euro fell 0.8 percent against the dollar, which rose 0.49 percent against a basket of major currencies.

European equities were falling hard in midday trading: Germany's DAX was down 1.5 percent, and France's CAC 40 dropped 1.3 percent.

The ECB's disinclination to buy more Eurozone bonds cast a pall over Friday's Eurozone summit in Brussels that was supposed to deliver a credible solution to the continent's two-year-old sovereign debt crisis.

One step forward, two steps back, Alan Clarke, U.K. and Eurozone economist at Scotia Capital, said to Reuters. The euro zone leaders might as well not bother. Pack their bags, go home, enjoy the weekend and do their Christmas shopping. 

The Dow Jones Industrial Average fell 0.4 percent, the Nasdaq Composite was off 0.74 percent and the S&P 500 lost 0.7 percent.

Gold for February delivery dropped $29.60 to $1,715.20, while spot gold fell $34.85 to $1,707.28.

Silver for March delivery decreased $1 to $31.63, while spot silver declined $1.02 to $31.51.