Gold falls over one percent

Gold prices fell more than 1 percent on Friday, surrendering gains that earlier took them to 11-week highs, after better-than-expected US payrolls data lifted the dollar and called into question the prospect of further US quantitative easing. Expectations that US monetary policy will remain ultra-loose have boosted investors' appetite for bullion this year, lifting prices 11 percent since end-December.
Spot gold was at $1,736.75 an ounce at 1500 GMT, down 1.3 percent, after having earlier peaked at $1,762.90. US gold futures for February delivery were down $18.50 an ounce at $1,740.80. Data from the Labour Department showed the US economy in January created jobs at the fastest pace in nine months, adding 243,000 positions, and the unemployment rate dropped to a near three-year low of 8.3 percent.
"I think people are asking some questions now with regards to the Fed's view about low interest rates into 2014," said Ole Hansen, vice president at Saxo Bank. "If job creation carries on at this pace, that could be revised, thereby removing some of the support for gold."
The tone of the report was further strengthened by revisions to November and December payrolls data, which showed 60,000 more jobs were created than previously reported. The dollar rose to session highs against the euro after the payrolls report, while equity markets also rallied. Among other commodities, oil prices extended gains to rise more than $1 a barrel amid expectations for firm demand from the United States.
"Today's release is a very positive report and will soothe some of the deeper concerns at the Fed," said Camilla Sutton, chief currency strategist at Scotia Capital. "I think increasingly (QE3) is being pushed to the background." A US Federal Reserve pledge last month to keep interest rates at rock-bottom levels and hints of another round of monetary easing, which would keep the dollar weak and the opportunity cost of holding bullion low, boosted gold.
Fed Chairman Ben Bernanke on Thursday defended the bank's policies against charges from Republican lawmakers they risked sparking inflation, saying the economy still needs plenty of support. "Yesterday's reaffirmation from the US Fed (chairman) that he is committed to keep rates low ... (gave) gold the necessary boost to hold gains and also break key resistance," Richcomm Global Services senior analyst Pradeep Unni said.
Among other precious metals, silver was down 1.6 percent at $33.72 an ounce. Its ratio to gold, the number of silver ounces needed to buy an ounce of gold, eased back to 51.3 from a high of 57.4 hit in December. Silver was the best performing of the major precious metals last month, rising more than 20 percent. Silver coin sales under the US Mint's American Eagle programme totalled 6.107 million ounces in January, their highest in a year.
Spot platinum was down 0.6 percent at $1,617.24 an ounce, while spot palladium was down 0.1 percent at $704.75 an ounce. Platinum earlier hit its highest since November 16 at $1,632.50. Platinum prices are up 15.9 percent this year, supported by concerns over output of the metal from major producer South Africa. Natixis said it expects output growth to slow from its estimate of a 6 percent increase in 2011.
"South African producers are suffering from high costs due to lower ore concentration, leading to deeper drilling, and an increase in energy costs," it said. "For 2012 we expect output to grow by around 3 percent to 206 tonnes as investment in South Africa and Zimbabwe become operational."