Gold slipped on Thursday as the dollar extended earlier gains after U.S. nonfarm payrolls rose more than expected in June, increasing bets that U.S. interest rates could rise earlier than expected.
Nonfarm payrolls increased by 288,000 jobs, while employment growth jumped in June and the unemployment rate declined to near a six-year low of 6.1 percent, the Labor Department said on Thursday.
Economists polled by Reuters had forecast a gain of 212,000 jobs in June, marking a fifth month above 200,000.
"Looking at the U.S. unemployment situation ...it is interesting that we are well into the territory now that one would expect a normalisation of monetary policy (accompanied to) an interest rates rise," Mitsubishi Corp analyst Jonathan Butler said.
"The more hawkish members of the FOMC are probably going to use this as evidence that the U.S. can sustain higher interest rates," he added. "There is still downside risk there on gold but it is going to probably take the next FOMC meeting before that becomes clear."
A low interest rates environment has been crucial in sending gold prices higher in the years after the 2008 credit crisis, as investors looked to put their money in non-interest-bearing assets.
Spot golddropped as much as 1.3 percent to a one-week low of $1,309.64 an ounce and was down 0.5 percent at $1,320.16 by 1413 GMT. The metal was 1.5 percent lower than a 3-month high of $1,332.10 hit earlier this week on geopolitical tensions in Iraq and Ukraine and was on course for its biggest daily loss since May 25.
U.S. gold futuresfor August delivery were down 0.7 percent at $1,321.30 an ounce.
The dollar hit a session high against the yen and the euro as the monthly European Central Bank news conference got under way.
ECB President Mario Draghi said the risks facing the euro zone economy meant interest rates will stay low for an extended period and detailed plans for a new, conditional tranche of ultra-cheap loans to banks that it hopes will lift the economy.
A stronger U.S. currency makes dollar-denominated assets like gold more expensive for foreign investors.
"Prices should come under pressure below $1,300 in the longer term, as the U.S. economy gets gradually better and investors find fewer reasons to put their money into safe assets like gold," Natixis analyst Bernard Dahdah said.
The technical picture also looked weak with Reuters technical analyst Wang Tao saying gold may retrace to $1,316 as it has failed to break a resistance at $1,334 twice.
Meanwhile, physical demand for gold has been lacklustre due to the recent rally in prices. In top buyer China, domestic priceswere at a discount of $1-$2 an ounce to global prices, underscoring sluggish demand.
Palladiumextended earlier gains to hit its highest level since February 2001 at $864.45 an ounce, as good U.S. data lifted prospects for stronger auto demand in the country. Palladium is mostly employed in gasoline autocatalysts, predominantly used in the United States and China.
Platinumwas up 0.2 percent at $1,504.20 an ounce, still close to a 10-month high of $1,517.50 hit on Wednesday, while silver stood up 0.1 percent to $21.12 an ounce.
Source: Reuters
Nonfarm payrolls increased by 288,000 jobs, while employment growth jumped in June and the unemployment rate declined to near a six-year low of 6.1 percent, the Labor Department said on Thursday.
Economists polled by Reuters had forecast a gain of 212,000 jobs in June, marking a fifth month above 200,000.
"Looking at the U.S. unemployment situation ...it is interesting that we are well into the territory now that one would expect a normalisation of monetary policy (accompanied to) an interest rates rise," Mitsubishi Corp analyst Jonathan Butler said.
"The more hawkish members of the FOMC are probably going to use this as evidence that the U.S. can sustain higher interest rates," he added. "There is still downside risk there on gold but it is going to probably take the next FOMC meeting before that becomes clear."
A low interest rates environment has been crucial in sending gold prices higher in the years after the 2008 credit crisis, as investors looked to put their money in non-interest-bearing assets.
Spot gold
U.S. gold futures
The dollar hit a session high against the yen and the euro as the monthly European Central Bank news conference got under way.
ECB President Mario Draghi said the risks facing the euro zone economy meant interest rates will stay low for an extended period and detailed plans for a new, conditional tranche of ultra-cheap loans to banks that it hopes will lift the economy.
A stronger U.S. currency makes dollar-denominated assets like gold more expensive for foreign investors.
"Prices should come under pressure below $1,300 in the longer term, as the U.S. economy gets gradually better and investors find fewer reasons to put their money into safe assets like gold," Natixis analyst Bernard Dahdah said.
The technical picture also looked weak with Reuters technical analyst Wang Tao saying gold may retrace to $1,316 as it has failed to break a resistance at $1,334 twice.
Meanwhile, physical demand for gold has been lacklustre due to the recent rally in prices. In top buyer China, domestic prices
Palladium
Platinum
