FE:Gold price falls for 2nd day as US dollar rises
Gold price slipped for a second session on Friday, down around 1 per cent as the dollar climbed ahead of US jobs data, which traders see giving clues to the timing of the Federal Reserve's stimulus tapering.
The U.S. non-farm payrolls report, scheduled at 1230 GMT, is expected to show the economy created 165,000 jobs last month.
The data could affect the timing of the U.S. central bank's expected scaling down of its $85 billion monthly bond purchases, the prospects of which has already triggered turbulence across major asset classes worldwide.
Gold posted its biggest quarterly loss on record, down 23 percent in the April-June period. Selling was exacerbated by comments from Fed Chairman Ben Bernanke last month that the U.S. economy was recovering strongly enough for the central bank to begin tapering in the next few months.
That would support a rise in interest rates, making gold less attractive.
"We have a forecast for a strong non-farm number (180,000) and if we prove right on that there could be some further downside in store for gold, because that would suggest that although rates are set to stay at record lows in Europe, that may not be the case in the United States," Danske Bank analyst Christin Tuxen said.
Spot gold dropped 1.3 percent to $1,233.81 an ounce by 0928 GMT. U.S. gold futures for August were down $18.80 at $1,232.90.
The metal posted a 5 percent drop last week, when it fell to its lowest since August 2010 at $1,180.71. It then staged a rebound, helped by traders forced to cover short positions at the beginning of the week.
The dollar rose nearly 1 percent against a basket of major currencies, bolstered by weakness in the euro after the European Central Bank and Bank of England said interest rates would stay low for an extended period.
After leaving its key interest rates unchanged on Thursday, the ECB said it may yet cut them further, responding to turbulence caused by the Fed's exit plan.
In other markets, the benchmark 10-year U.S. Treasury yield rose above 2.5 percent.
As gold pays no interest, the rise in returns from U.S. bonds and other markets is seen as negative for the metal.
UNDER PRESSURE
Rapid outflows from gold exchange-traded products (ETPs) and softer-than-expected physical demand were also keeping gold prices under pressure.
Gold ETPs holdings fell by $4.1 billion in June and $28.2 billion year-to-date, according to data from BlackRock.
Indian consumption has fallen since the government imposed new import restrictions, while Chinese buyers are waiting on the sidelines for prices to fall further, or at least stabilise.
"Chinese premiums are holding up and we expect them to be strong buyers if we get a dip back below $1,200," ANZ analyst Victor Thianpiriya said.
Silver fell 2.2 percent to $19.08 an ounce. Platinum was down 0.7 percent to $1,328.74 an ounce and palladium dropped 0.6 percent to $670.72 an ounce.
