Gold was set for its first weekly decline in 12 weeks on Thursday after US jobs data lifted the dollar and further eroded investor demand for bullion, although several analysts said they viewed this as temporary. Gold is on course for a 1.9 percent fall this week, which would mark its largest weekly drop since early July, while holdings of gold in the world's largest exchange-traded fund, the SPDR Gold Trust, fell for a fourth consecutive session, indicating lower investment appetite.
-- Gold on course for first weekly fall in 12 weeks
Spot gold hit a high of $1,349.05 an ounce before slipping to $1,339.50 by 1513 GMT, versus $1,343.50 on Wednesday. US gold futures for December delivery were down $4.0 an ounce at $1,340.20. The dollar pared losses against a basket of currencies after weekly US jobless claims fell by more than expected, soothing some fear about the health of the ability of the economy to generate jobs.
"The long-term factors that have driven gold higher over the last 12 to 18 months are largely intact," said HSBC analyst James Steel. "Gold has been rallying in all currencies, which implies that it's not entirely a US dollar phenomenon." Gold earlier benefited from weakness in the dollar after US Treasury Secretary Timothy Geithner was quoted by the Wall Street Journal as calling for "norms" on exchange rate policy.
Financial markets are alight with speculation over a possible bargain by finance ministers and central bank chiefs of the Group of 20 countries to rebalance the global economy. Reflecting the lower appetite among investors for gold, SPDR said its holdings eased to 1,299.177 tonnes by October 20 from 1,300.089 tonnes on October 19. The holdings hit a record at 1,320.436 tonnes on June 29.
The gold price has fallen by nearly 2 percent in dollar terms this week and is down by 1.8 percent in euros, down 2 percent in yen and down 1.2 percent in Swiss francs. The strength in the dollar in the past week has stripped more than 3 percent off the gold price since it hit a record high just above $1,387 last week.
Gold also shed nearly 3 percent on Tuesday in its largest one-day fall since July following China's surprise announcement of an interest rate rise. "Despite the renewed dollar weakness, we've been struggling to regain traction to the upside. There have been a lot of investors going into gold already and probably at this juncture, would probably be a little hesitant, because now everyone is focusing on currency moves and the outcome of what could happen at the weekend," said Ole Hansen, a senior manager at Saxo Bank.
Silver fell to $23.81 an ounce, from $23.90. Data from the Swiss Customs Office showed imports and exports of platinum and palladium fell in September from August. Platinum prices were last up 0.4 percent at $1,685.49, while palladium drew strength from the rally in the base metal complex and rose 1.7 percent to $594.35 an ounce.