Gold edged down towards $1,200 (U.S.) an ounce in Europe on Friday as traders took to the sidelines ahead of hotly-anticipated U.S. non-farm payrolls data due later in the day, with a strong reading expected to boost risk appetite.
The metal has benefited this year from nervousness in the financial markets, which has knocked assets seen as higher risk, such as stocks, industrial commodities and the euro.
Spot gold was bid at $1,202.95 an ounce at 0920 GMT, against $1,206.05 late in New York on Thursday. U.S. gold futures for August delivery eased $5.10 to $1,203.20.
"There are compelling reasons to believe that the jobs data today will beat market expectations, and President Obama's comments on this, a day ahead of this release, is forcing the markets to believe that U.S. recovery is on a scheduled path," said Pradeep Unni, senior analyst at Richcomm Global Services.
On Wednesday President Barack Obama said he expected the report to show strong jobs growth.
"Ideally such data should boost the dollar, trigger diversification to riskier assets and sink bullion, but with debt concerns mounting in the euro zone, the degree of sell-off in gold could get limited to $1,195-1,184."
A Reuters poll forecast 513,000 jobs were created in May, but some in the market were anticipating an even stronger figure after upbeat data this week.
The euro rose against the dollar ahead of the numbers, due at 1230 GMT. Trading activity in the foreign exchange markets was down across the board in early trade, a Reuters Insider Television report showed.
European stocks edged up ahead of the data, which investors are hoping will soothe recent concerns about the pace of global recovery.
"The signs are this afternoon's U.S. job report will be strong, as indicated by economic data as well as comments from President Obama," said Credit Agricole in a note.
Gold investment continued, with coin sales strong in Europe and the world's largest gold exchange-traded fund, SPDR Gold Trust , reporting a 21.3-tonne inflow on Thursday that took its holdings to a record 1,289.839 tonnes.
London's ETF Securities also reported inflows of 41,423 ounces of metal into its gold-backed exchange-traded products that day, worth around $50-million.
"ETF investors' continued willingness to load up on gold exposure provides a degree of comfort that a price floor is near," said UBS analyst Edel Tully in a note.
Elsewhere Rand Refinery Ltd., the world's largest gold refiner, said production of South Africa's Krugerrand gold coins soared by 50 per cent in a week as the euro zone debt crisis drove up investor demand.
Among other commodities, oil prices turned higher in European trade, climbing back above $75 a barrel, while industrial metals prices also firmed.
Other precious metals were little changed, with platinum at $1,540.05 an ounce against $1,542.50, palladium at $447.50 versus $448.50, and silver at $17.87 against $17.94.
"Pockets of pressure have been seen in both (platinum group) metals this morning," said James Moore, an analyst at TheBullionDesk.com.
"The failure to clear resistance around $1,573 in platinum and $472 in palladium could prompt more technical-related pressure in the short term."