Gold falls in Europe

Gold fell on Friday after data showed the US economy added more jobs than expected in March, lifting the dollar and supporting expectations US authorities may move towards a tighter monetary policy. Spot gold slipped 1.7 percent to a session low at $1,412.55 an ounce and was bid at $1,419.50 an ounce at 1409 GMT, against $1,436.48 late in New York on Thursday. US gold futures for April delivery fell $17.80 to $1,421.10.
US employment recorded a second straight month of gains in March, rising by 216,000 jobs, and the jobless rate fell to a two-year low of 8.8 percent. "Nonfarm payrolls data was better than expected, further evidence of the economic recovery in the United States," said BNP Paribas analyst Anne-Laure Tremblay.
"This may bring further fuel for the Federal Reserve to withdraw exceptional measures. The resulting decline in global liquidity would likely have a negative impact on gold." The dollar rose to a three-month high against the yen and extended gains versus the euro after the figures, which analysts said provided new evidence the US economy is recovering.
It pared some gains after another report later showed the US manufacturing sector grew at a marginally slower pace in March than in the previous month, but remained well supported. Analysts are weighing up the chances of the Fed reducing its quantitative easing measures, as a precursor to an eventual rise in interest rates. Gold tends to suffer when rates climb, as the opportunity cost of holding non-yielding assets increases.
Gold prices hit a record $1,447.40 an ounce last month as unrest across the Middle East and North Africa, the re-emergence of eurozone sovereign debt issues and an earthquake and tsunami in Japan prompted buying of the metal as a haven from risk. Gold recorded a 10th consecutive quarter of gains in the first three months of 2011, but it was the smallest rise since the financial crisis gripped markets in late 2008. Nick Moore, head of commodity strategy at RBS, said gold prices were likely to suffer further from a positive payrolls report after coming under pressure from expectations that the European Central Bank will hike interest rates this month.
"All we have seen is the positive side of the gold story, and what we have to see now is how gold fares in an environment of rising interest rates, where holding a non-yielding asset goes against you," he said. Concerns over the financial health of smaller eurozone economies such as Portugal and Ireland are still weighing on the euro, meanwhile.
Among other commodities, oil prices rose, with US crude edging above $107 a barrel and Brent crude approaching $118 on unrest across the Middle East and North Africa. In Libya, rebels sought to retake the oil town of Brega and regain momentum against better equipped forces loyal to Muammar Gaddafi. More unrest was reported in Bahrain. Investment products such as gold-backed exchange-traded funds saw less interest, with the largest, New York's SPDR Gold Trust, reporting its biggest ever quarterly outflow in the first three months of 2011.
Elsewhere the US Mint said it sold more gold American Eagles in the first quarter than in any quarter since the end of 2009, and reported its highest ever quarterly sales of silver American Eagle coins. Silver was bid at $37.27 an ounce against $37.60. Platinum was at $1,761.49 an ounce against $1,766.30, while palladium was at $765.72 versus $758.35.