London: Gold erased earlier losses on Thursday after the European Central Bank launched a multibillion euro bond-buying programme aimed at reviving a sagging Eurozone economy.

President Mario Draghi said the ECB would print money to buy up 60 billion euros ($69 billion) worth of sovereign bonds a month in the Eurozone, where inflation at minus 0.2 per cent is far below the central bank’s target of just under 2 per cent.

He said inflation was expected to increase gradually later in 2015 and in 2016 as the ECB’s monetary policy measures support demand and assuming a gradual increase in oil prices.

Gold is usually seen as a hedge against inflationary concerns.

“Gold is reacting to what Draghi has to say, to the bigger package that was announced and to rebounding inflation expectations in the Eurozone,” ABN Amro analyst Georgette Boele said.

Spot gold, which had fallen as much as 1 per cent to a session low of $1,279.5 in early trade, turned positive, up 0.2 per cent at $1,295.30 an ounce by 1456 GMT, after Draghi’s announcement. It had climbed to its highest since Aug. 15 at $1,305 on Wednesday, before falling back below $1,300.

US gold futures for delivery in February also moved higher, up $3.60 at $1,297.00 an ounce, The metal has risen around 10 per cent since the beginning of the month, underpinned by higher demand for assets perceived as safer, mostly driven by economic and political uncertainties in the Eurozone.

The metal gained strongly in euro terms, with euro-denominated gold reaching its highest since April 2013 at 1,136, after Draghi’s comments knocked the euro within reach of last week’s 11-year low against the dollar.

“The implications for the euro of a two-year (bond-buying) programme beginning in March is quite negative and we could see more dollar strength,” Mitsubishi Corp strategist Jonathan Butler said.

“That, by itself, would be a headwind for gold but offsetting that ... there would be further safe-haven buying for gold in both euro and dollar terms.” The recent steep climb in gold prices has however worried/some investors, who started to take profits in the previous session and were looking at Sunday’s snap election in Greece and next week’s Federal Open Market Committee (FOMC) two-day policy meeting for clues about the wider macro economic environment.