London: Gold prices eased in Europe yesterday ahead of key US jobs data, and traders remained wary because a robust employment number could raise expectations for a US interest rate hike.
Spot gold was bid at $1,121.20 an ounce at 1030 GMT, against $1,131.40 late in New York on Thursday. US gold futures for February delivery on the Comex division of the New York Mercantile Exchange fell $12.20 to $1,121.50.
Bullion prices have benefited from low US interest rates in the last year, which have contributed to weakness in the dollar and cut the opportunity costs of holding non-interest bearing assets such as gold.
A rate hike, which is likely to come when data shows a pick-up in economic activity, could therefore hurt gold prices. "This year gold is going to be following US interest rates, and it is going to be following the dollar," said Jeremy East, Standard Chartered's global head of commodity derivatives trading.
"The play for gold is speculating on the move in US interest rates," he said. "[The payrolls data] will obviously have an impact on expectations for that."
Investment demand for gold-backed exchange-traded funds also remained soft after a lacklustre start to the new year. The largest gold ETF, New York's SPDR Gold Trust, reported a further 0.4 tonne dip in its holdings on Thursday.
Among other precious metals, spot silver tracked gold lower to $18.05 an ounce against $18.22. Platinum was at $1,539.50 an ounce versus $1,554.50, while palladium was at $423 an ounce against $424. The United States' first platinum- and palladium-backed ETPs are due to start trading in New York later yesterday, which will allow US investors to invest in the metals used in autocatalysts via an ETP.
"Both [platinum and palladium] could gain serious traction should ETF investment demand prove strong," James Moore, an analyst at TheBullionDesk.com, said in a note.
