Gold fell on Friday as oil softened and investors fretted that strong US jobs data had reduced chances for US interest rates to be cut by more than 25 basis points next week. Spot gold dropped to $794.30/795.30 a troy ounce at 1556 GMT, compared with $803.20/803.90 quoted late in New York on Thursday.
US non-farm payrolls showed employers added 94,000 jobs in November. Lower US rates would tend to benefit gold by denting the dollar's yield appeal, but the firm jobs numbers quelled speculation the Fed might go for a 50 basis point cut.
With no momentum of its own, some analysts felt that bullion prices could well linger at the lower end of recent trading ranges, having failed twice to regain peaks seen in early November above $845.
"We've had lower highs the last few days, funds can't make their minds up about what to do," Simon Weeks, director of precious metals trading at Bank of Nova Scotia, said.
"We're still in the $770 to $808 range, but I think the bias is to go lower as there is no real physical off-take or longer term investment demand at the moment plus there is an overhang of long-positioning," he added.
Oil prices provided little comfort for gold, dipping below $90 a barrel. In other bullion markets, the most-actively traded February COMEX contract fell $8.10 to $799.10 per ounce.
The most active gold futures contract on the Tokyo Commodity Exchange rose to its highest level in more than a week at 2,902 yen per gram. Dealers said that while gold was struggling to break out of recent ranges, the market's fundamentals still looked positive.
"The Fed might not hold back and go for the 50 basis point cut. I still think the dollar has more downside as we've only scratched the surface of the credit crisis, but we could see more year-end profit-taking first," a senior trader said.
The Fed has cut rates by 75 basis points since September to help relieve market strains and potential fallout from the credit crunch that has gripped markets since August.
Dollar-priced bullion has been one of the chief beneficiaries of the market turbulence with wider investment demand reported. Bullion holdings used to back StreetTRACKS Gold Shares, the world's largest gold ETF, rose on December 6 to 602.37 tonnes, after setting a record 609.33 tonnes last week.
In other precious metals, silver slipped with gold to $14.35/14.40 per ounce from $14.45/14.50 late in New York on Thursday. Platinum continued to dip to $1,455/1,460 per ounce against $1,465/1,469 an ounce in New York on Thursday as concerns about this week's South African miners strike subsided. Palladium edged up to $345.50/348.50 from $345/348.
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