Gold fell around 1 percent on Friday, on pace for its biggest one-day loss in over a month, after encouraging US payrolls data smashed hopes of extra stimulus from the Federal Reserve that has been priced into bullion's recent rally. Despite Friday's losses, the metal is still on track to eke out a small gain for its fifth consecutive weekly rise, the longest streak since August last year. It is up 11 percent year to date.
Analysts had warned of a pullback after bullion rallied on hopes of Fed actions to boost growth. The Fed said last week it would be likely to keep rates low until at least late 2014 and it was ready to offer the economy additional stimulus.
"The jobs report has taken the market's anticipation of additional quantitative easing off the table," said Frank McGhee, head precious metals trader of Integrated Brokerage Services LLC. Spot gold was down 1.2 percent at $1,737.40 an ounce by 11:58 am EST (1658 GMT), after having earlier peaked at a 2-1/2 month high at $1,762.90. US gold futures for April delivery were down $18.50 an ounce at $1,740.80, with trading volume in line with its 30-day average.
US nonfarm payrolls jumped 243,000, the Labour Department said, as factory jobs grew by the most in a year. The jobless rate fell to 8.3 percent - the lowest since February 2009 - from 8.5 percent in December. "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."
Silver was down 2.1 percent at $33.56 an ounce. Silver was the best performing of the major precious metals last month, rising more than 20 percent. Silver American coin sales totalled 6.1 million ounces in January, their second strongest month since the US Mint introduced them in 1986.
Even though analysts said Friday's job numbers could postpone the need of another round of Fed monetary easing, gold should still be underpinned by rock-bottom interest rates, which minimise the cost of holding the zero-yielding asset. "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, spot platinum was down 0.4 percent at $1,620.49 an ounce, while spot palladium was also down 0.4 percent at $702.72 an ounce. Platinum prices are up about 16 percent this year, supported by concerns over output of the metal from major producer South Africa.
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