London - Gold fell more than 2 percent on Friday after US payrolls data beat expectations, supporting hopes that the recovery of the world's biggest economy is still on track, which may quicken the end of the Federal Reserve's ultra-loose monetary policy.
US employers stepped up hiring in May, Labor Department data showed on Friday, adding 175,000 jobs, just above the median forecast in a Reuters poll, in a sign the economy was growing modestly.
Spot gold was down 1.9 percent at $1,387.10 an ounce at 15:29 SA time, having earlier hit a low of $1,381.29, while US gold futures for August delivery were down $29.40 an ounce at $1,386.40.
Gold erased all its gains for the week to turn slightly lower.
“Investors has been buying gold on the back of stock and dollar weakness but the failure to translate into higher prices is leaving it exposed to some weakness especially as it looks like the dollar is regaining a bit of its strength.”
The dollar hit session highs against the euro in the wake of the data while stock markets rose, with European shares climbing and US stock futures extending gains.
US economic data has been in the spotlight since Federal Reserve Chairman Ben Bernanke said last month the central bank's decision to taper off monetary stimulus would be taken “in the next few meetings” depending on whether the US housing and job markets showed continued strengthening.
Successive rounds of monetary easing from the Fed have helped drive gold prices to record highs in recent years, maintaining pressure on interest rates while stoking fears of inflation.
But a top US central bank official said on Thursday investors may have over reacted recently to the possibility of the Fed winding down its monetary easing.
INDIA ACTS ON GOLD
Officials in the world's biggest bullion consumer, India, continued efforts to curb gold imports on Friday, with the Reserve Bank of India extending restrictions on loans against security of gold coins per customer to all co-operative banks.
This came after India announced another increase in its import duty for gold earlier this week.
Standard Bank said in a note that it expects demand in the physical gold market to continue easing next week.
“We note that holidays in (number two consumer) China next week could add to gold's weakness,” Standard Bank said in a note. “We would target $1,375 for gold on the downside.”
Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 2.7 tonnes to 1,007.74 tonnes on Thursday, as outflows resumed after holding steady for nearly a week. Holdings are at four-year lows.
Silver was down 2.7 percent at $21.96 an ounce, while palladium fell 1.4 percent to $748.22 an ounce.
Platinum rose to a two-month high at $1,537.75 an ounce, supported by supply disruptions in the world's largest platinum supplier South Africa, before retreating to $1,491.49, down 2.3 percent.
Platinum is still the best-performing precious metals this week, up 2.2 percent.
It extended its premium over gold to over $120 an ounce earlier on Friday, its highest since early August 2011. - Reuters