Gold slipped on Thursday after US nonfarm payrolls rose more than expected in June, fuelling expectations US interest rates could rise earlier than expected. US employment growth jumped in June and the jobless rate closed in on a six-year low, compelling evidence the economy was growing briskly heading into the second half of the year.
"It is interesting that we are well into the territory now that one would expect a normalisation of monetary policy," said Mitsubishi Corp analyst Jonathan Butler. "There is still downside risk there on gold," he added. Spot gold was down 0.6 percent to $1,319.15 an ounce by 2:04 PM EDT (1404 GMT), having earlier dropped as much as 1.3 percent to a one-week low of $1,309.64.
US COMEX gold futures for August delivery settled down $10.30 at $1,320.60 an ounce, with trading volume about 30 percent above its 30-day average, preliminary Reuters data showed. Some analysts argue that gold can rise in tandem with higher interest rates.
"If interest rates start rising, it's because the Fed is worried about inflation, and that inflation factor can drive gold prices up even as interest rates rise," said Jeffrey Christian, managing director at CPM Group. Among other metals, palladium was up 0.4 percent at $855.60 an ounce. Palladium, mostly employed in gasoline autocatalysts, predominantly used in the United States and China, rose to its highest level since February 2001 at $864.45 an ounce, as good US data lifted prospects for stronger auto demand. Platinum was down 0.5 percent at $1,494.25 an ounce, hovering near a 10-month high of $1,517.50 reached on Wednesday, while silver ended unchanged at $21.09 an ounce.
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