Gold fell slightly on Friday as the dollar regained some ground against the euro, with investors mostly taking a wait-and-see stance ahead of key US jobs data due later in the day.
In Asian trade today, spot gold stood at $US853 per ounce, down 0.4% from New York's notional close of $US856.10.
All eyes were on the US government's employment report due later on Friday, which was expected to show the world's biggest economy had lost more than 500,000 jobs in December.
A worse-than-expected result would likely have a big impact on US stocks and the dollar, and consequently on gold.
On Thursday gold rose 1.6%, largely driven by a fall in the dollar, which makes gold more attractive as an alternative asset.
But the dollar on Friday regained some ground against the euro, which was hurt by expectations of further rate cuts by the European Central Bank.
The euro slipped 0.3% to $US1.3671. The European single currency has whipsawed between $US1.3964 and a three-week low of $US1.3312 this week, according to EBS data.
Some analysts said gold could face further selling even if the jobs report comes in worse than expected and pushes down the dollar.
Another factor weighing on gold was recent weakness in oil after data this week showing soaring US crude inventories.
"Gold currently looks more vulnerable to stock markets and oil, or commodities in general,'' because once investors turn risk averse and sell assets for cash, a sell-off hits them all, said Shuji Sugata, manager at Mitsubishi Corp Futures and Securities.
"Cash activity is limited as liquidity has gone down ahead of the US government jobs report,'' Sugata said.
Gold hit a two-week low of $US833 per ounce in early trade on Thursday on increasing demand for cash after a grim private-sector report on the US jobs market helped send global equities reeling.
Comex gold futures eased in Asia after rising 1.5% the previous day. US gold futures for February delivery stood at $US853.8 per ounce, down 70 cents from Thursday's settlement on the Comex division of the New York Mercantile Exchange.
The December gold contract on the Tokyo Commodity Exchange was up 18 yen per gram at 2513 yen.
HSBC said it was raising its 2009 and 2010 gold price forecasts on expectations the faltering global economy will prompt investors to buy into the metal as a haven from risk.
But the bank cut its 2009 price view for platinum by 15% on slowing industrial demand.
South Africa's Harmony Gold Mining, the world's fifth-largest gold producer, said it sees gold rising to $US900 an ounce this year, and that it expects to produce 1.6 million ounces of the precious metal this year.
