NEW YORK Gold fell for a second day on Thursday, hit by selling among investors who were looking for a possible surge in Friday's U.S. payrolls data to follow several reports indicating that employers have been adding jobs, curbing the need for safe-haven assets like gold.
Improved job market readings add to other healthy economic reports out this week, that inspired some investors to take profits on gold as the need for a safe haven asset seemed to be lessening, at least in the United States.
Spot gold slid to $1,205.05 an ounce by 3:30 p.m. EDT, from $1,224.30 an ounce late in New York on Wednesday, well off this week's peak of $1,230.60 an ounce.
Benchmark U.S. gold futures for August delivery on the COMEX division of the New York Mercantile Exchange closed $12.60, or 1.03 percent, lower at $1,210.0 an ounce, and continued slipping in after-hours trade.
"U.S. economic reports here have been good, the stock market looks like it's bottoming, risk aversion is coming off a little bit, and people want to go into a little riskier assets," said Donald Selkin, chief market strategist at National Securities Corp in New York.
For example, new orders received by U.S. factories rose 1.2 percent in April, U.S. Commerce Department data and followed March's surprisingly robust gain.
In the labor market, other reports showed U.S. private sector employers added jobs in May and the economy's dominant services sector increased payrolls for the first time in more than two years, building evidence that the labor market was picking up steam.
"Here, in the U.S., you've had one good report after another. Factory orders were very good, plus the ISM employment component gained. So, that gives optimism for tomorrow's report," said Selkin, referring to release of the May U.S. labor report.
In response, Friday's nonfarm payrolls report could show "quite a large number" of jobs added in May, helped by a likely spike in the hiring of census workers, Macroeconomic Advisers LLC chairman Joel Prakken said on Thursday.
Analysts' average forecast for U.S. payrolls growth are expected to show 513,000 jobs were added in May. This could potentially boost the dollar and further undermine bullion's safe-haven appeal.
If true, investors could continue unwinding so-called safe haven trades, taking profits off of its recent advance to put the cash to work in other markets, like equities.
Fears of a spreading euro-zone debt crisis also abated, adding to participants desire to ease their safe-haven investments. Euro zone debt worries was a key driver behind gold's rally to a record $1,248.95 an ounce in mid-May.
While some of that concern has been mitigated, it could take months for some of the austerity measures in the more debt-ladened euro zone member states to take hold, keeping an underpinning under the gold market.
SPDR Gold Trust said its holdings rose to a record at 1,268.539 tonnes as of June 2 from 1,268.234 tonnes in the previous business day.
In India, the world's top physical gold market, some jewelers stocked up as bullion prices dropped from a two-week high, while selling from other consumers in Asia also slowed, keeping premiums for gold bars steady.
Silver fell faster than gold, because it was getting sold as both a financial and industrial asset.
"The precious component is under a little bit of pressure and the industrial component is getting clobbered, along with copper, on all those fears about China," said Sterling Smith, an analyst for Country Hedging Inc. in St. Paul, Minnesota.
Spot silver dipped to $18.14 an ounce, down from late Wednesday $18.31.
"If risk appetite returns to financial markets in coming months, and we see a waning of investor appetite for precious metals, we believe that silver will be more vulnerable to a price correction than gold," analysts at RBS said in a note.
Spot platinum was at $1,545.50 an ounce down from late Wednesday's quote at $1,545, and palladium slipped to $449.50 from $454.50 late on Wednesday.
(Additional reporting by Barani Krishnan in New York, Amanda Cooper, Humeyra Pamuk and Jan Harvey in London and Lewa Pardomuan in Singapore; Editing by Marguerita Choy)
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