LONDON Gold dipped on Thursday after the first of two key U.S. jobs reports this week beat forecasts, raising expectations for an interest rate rise and lifting the dollar.
U.S. private employers added 253,000 jobs in May, above economists' expectations, a report by a payrolls processor showed on Thursday.
The ADP figures come ahead of the U.S. Labor Department's more comprehensive non-farm payrolls report on Friday, which includes both public and private sector employment.
"We are getting important data today and tomorrow, and gold is very much dependent on how the dollar and yields will react to that data, so it's a bit of a waiting game," said Georgette Boele, commodities strategist at ABN AMRO in Amsterdam.
Spot gold was down 0.2 percent at $1,265.30 an ounce by 1410 GMT, having peaked the previous day at its strongest since April 25 at $1,273.74.
U.S. gold futures fell 0.7 percent to $1,263.30.
Also weighing on gold was the slightly firmer dollar index, which extended gains after the ADP data, already supported by higher U.S. Treasury yields and solidifying expectations of a rise in U.S. interest rates this month. [FRX/]
Positive payroll data from the United States could mean the Fed will raise rates as expected at its June 13-14 meeting. Traders believe there is an 87 percent chance of a rate rise, according to CME Group's FedWatch tool.
Gold, which has gained about 10 percent this year, has good support slightly below current levels, Boele said.
"Gold looks very well protected around the $1,250 area at the moment. You have the 200-day moving average supporting the price," she added.
Demand for American Eagle gold coins remains lacklustre, data from the U.S. Mint showed, with sales for the first five months of the year tumbling 56 percent from the same period last year to 186,500 ounces.
Among other precious metals, silver fell 0.7 percent to $17.17 an ounce and platinum shed 1.1 percent to $932.80, after touching a low of $923, the weakest since May 15.
"Platinum is struggling because of weaker outlook expectations for car sales as well as jewellery sales in China," Boele said.
U.S. new vehicle sales in May were likely propped up by heavy discounts, say industry analysts who expect that demand in the month was little changed or up just slightly after two months of falling sales.
Platinum is mainly used in auto catalysts that reduce harmful emissions from the exhaust.
Palladium climbed 0.9 percent to $824.50 after touching an intraday peak of $827.60, the highest since May 1.
(Additional reporting by Vijaykumar Vedala in Bengaluru; Editing by David Goodman and Susan Fenton)