Gold falls on stronger US dollar

New York (Mar 4)  Gold prices have fallen, heading for a third day of losses, as the US dollar extends gains versus the euro after US economic data.

Data showed that US private employers added 212,000 jobs in February, while January's private payrolls were revised upwards to 250,000.

Spot gold, higher initially, was down 0.3 per cent at $US1,199.80 an ounce by 6.45am (AEDT). The metal had fallen to a one-week low of $US1,194.90 on Tuesday, dented by an 11-year high of the US dollar and expectations of a US interest rate hike.

US gold for April delivery dropped $US3.50 to settle at $US1,200.90 an ounce.

"It is struggling to find the real direction and in the meantime it is reacting to the dollar and the US data, which will continue to drive the market for now," Bernard Sin, senior vice president at MKS Finance, said.

The US dollar hit its highest since September 2003 against a basket of leading currencies, bolstered by strong US government bond yields this week.

A stronger US currency makes dollar-denominated gold more expensive for holders of other currencies, while the rise in returns from US bonds is negative for the metal, which pays no interest.

Spot gold traded well within the prior session's range.

"Inside days are usually an indication that the market's going to break out one way or the other," Eli Tesfaye, senior market strategist for RJO Futures in Chicago, said.

"Right now we're pretty much technical. There's no fundamental moving this market."

The bullion market was likely to focus on the Labour Department's report on US February nonfarm payrolls on Friday to gauge when the Federal Reserve might raise rates.

Expectations of robust US economic data and higher US interest rates, coupled with investor outflows from bullion funds, are seen as the biggest drawbacks for non-interest-bearing gold.

Holdings in SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, fell 0.35 per cent to 760.80 tonnes on Tuesday. That followed a near eight-tonne fall on Monday, the biggest outflow so far in 2015.

Traders were also keeping an eye on the euro, which has been subdued over the past few sessions ahead of a European Central Bank policy meeting on Thursday and the implementation of its government bond buying program due to start in March.

Source: BusinessSpectator