Gold fell further from an earlier nine-week high on Friday as stronger-than-expected US payrolls data boosted the dollar and stock markets, shoring up a recovery in equities from this week's rout. The Labour Department said US job growth surged in December, and revised employment for the prior two months sharply higher, suggesting that a recent manufacturing-led slowdown in economic growth would be temporary.
That lifted stocks, which had been flagging after an earlier recovery ran out of steam, while pushing the dollar up 1 percent versus the euro. Spot gold touched a low of $1,093.53 in the wake of the data and was down 0.8 percent at $1,100.65 an ounce at 1356 GMT. US gold futures for February delivery were down $7.40 an ounce at $1,100.40. "(These are) very strong numbers, good for the US dollar," Georgette Boele, analyst at ABN Amro, said. "The US dollar is the most important negative driver for gold prices, so this will add pressure."
A strong report could be seen as prompting the Federal Reserve to lift interest rates at a faster pace. Rising rates typically weigh on gold, as they lift the opportunity cost of holding non-yielding assets, while boosting the dollar. The prospect of rising rates in the United States was a key factor pushing gold down more than 10 percent last year.
Jitters over the Chinese economy had spooked global stock markets earlier this week, sending investors sprinting to safe-haven assets, and pushing gold sharply higher. Gold peaked at $1,112 earlier on Friday, its highest since early November. Investment appetite for bullion showed signs of picking up this week. Holdings of the world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, rose 4.2 tonnes on Thursday, data from the fund showed. "Concerns over China, and possibly the Middle East, have prompted some safe-haven demand. That has stirred the gold price," Capital Economics analyst Simona Gambarini said. "But as we know, safe-haven demand can be quite volatile."
"We are generally positive on the gold price for the year, but not necessarily on safe-haven demand. That's a wild card." Silver was down 2.1 percent at $14.00 an ounce, while platinum was up 0.2 percent at $874.65 an ounce. Palladium was up 1.6 percent at $500.25 an ounce. Palladium fell below $500 for the first time since September 2010 on Thursday, reaching a low of $481.67. It is set to end the week down 11 percent.
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