Gold edges down ahead of US payrolls data

Gold eased in Europe on Friday, giving up some of the last session's gains, as growing optimism over the economic recovery shifted investors' focus to riskier assets, though moves were muted ahead of a key US jobs report.

Spot gold slipped to $1,349.35 an ounce at 1122 GMT, from $1,353.30 an ounce late in New York on Thursday. US gold futures for April delivery fell $2.80 to $1,350.20.

Gold has retreated from a two-week high at $1,355.80 hit the previous day, when Federal Reserve chair Ben Bernanke said the US recovery still needed Fed support. His comments were taken to indicate that US monetary policy would stay accommodative.

A spate of better-than-expected US data had fuelled expectations for a move towards monetary tightening sooner rather than later, depressing gold. The US payrolls data due at 1330 GMT will be closely watched by financial markets. "The consensus for the payrolls data is for a moderate increase but given US positive data in the last few days, expectations may be skewed to the upside," said analyst Matt Turner of Mitsubishi Corp.

Turner said a positive figure could ignite risk appetite and further dull demand for the safe-haven metal.

The markets were quiet ahead of the numbers, with the euro little changed against the dollar after the previous session's losses, and European shares ticking up slightly in line with world stocks.

Oil was steady just above $90 a barrel, with ongoing unrest in Egypt underpinning prices. This also helped support gold, although the situation has sparked little fresh buying.

Asian buyers were still largely absent, with market quiet in China, Hong Kong and Singapore during the Lunar New Year holiday there and Indian consumers put off fresh buying by Thursday's price volatility.

Gold holdings of exchange-traded funds also inched higher, with those of the largest, New York's SPDR Gold Trust, edging up just over two tonnes on Thursday.

Silver was bid at $28.85 an ounce against $28.91. Holdings of the largest silver ETF, the iShares Silver Trust, fell more than 30 tonnes to their lowest since November on Thursday.

Platinum was at $1,832 an ounce against $1,834.99, while palladium was at $811.05 against $817.22. UBS analyst Edel Tully said in a note that data released on Thursday by Switzerland, one of the leading clearers of platinum group metals in Europe, on its platinum imports and exports did not point to strong consumption. "That Switzerland is once again accumulating metal is not a positive indicator for platinum demand," she said. She added that a sharp increase in exports from Japan, one of the top investment buyers of platinum, was worrying.

"The risk of further Japanese disinvestment is the single most negative factor in an otherwise positive platinum story, and therefore very important to watch," she said.