Gold fell more than 1 per cent on Wednesday, defying a rebound in oil prices, after the US dollar bounced against the euro and speculators in Japan shifted some of their money back to stocks.
Investors await a series of economic data due out this week, including US non-farm payrolls numbers on Friday, and interest rate decisions from central banks, which could give direction to the dollar and precious metals.
Gold was trading at $776.90 an ounce, down $4.60 from New York's notional close. It fell as low as $772.10 on Wednesday, not far from a near two-week low of $761.30 hit the previous day.
Bullion has rebounded around 14 per cent since falling to a 13-month low of $680.80 in October, but the upside was capped by recent weakness in oil, a firm dollar and worries about an increasingly bleak global economic outlook that could curb investors' appetite for risky assets.
'The US job data will be released and many people expect it to be very bad. The bear trend will continue for spot gold,' said Kazuhito Saito of Interes Capital Management in Tokyo, adding that some Japanese investors sold gold to buy stocks.
'It may fall below $750,' said Saito, referring to the current support level and the 30-day moving average.
US payrolls probably shed 316,000 jobs in November, following October's drop of 240,000 jobs, according to economists polled by Reuters. The unemployment rate is seen rising to 6.8 per cent in November from October's 6.5 per cent.
The Nikkei rose 1 per cent after tumbling to a near two-week low the day before.
Oil rose more than $1 a barrel on a technical rebound.
The euro slipped to $1.2695 in thin trade ahead of interest rate decisions from the European Central Bank, the Bank of England and the Reserve Bank of New Zealand on Thursday.
A Reuters survey showed prices of platinum, palladium and silver, which have significant industrial uses, are expected to slump next year as demand sags in line with economic growth.
But gold should fare better than the industrial precious metals as investors buy bullion as a haven from risk, especially if the dollar recovery loses traction. A poll of a dozen analysts showed 2009 gold forecasts down just 9 per cent.
Platinum was trading at $794.00 an ounce, down $2.00 from New York notional close. It has lost more than 60 per cent since hitting a record of $2,290 in March to track weaker gold and recently, dismal auto sales and recession fears.
New York gold futures fell $4.6 an ounce to $778.7 in electronic trade.-Reuters
