* Traders await key U.S. non-farm payrolls data at 1330 GMT
* Dollar firm on hopes data may increase chance of rate hike
* Traders await launch of platinum, palladium ETPs
(Updates, adds comment, changes dateline from TOKYO)
By Jan Harvey
LONDON, Jan 8 (Reuters) - Gold prices eased in Europe on
Friday ahead of key U.S. jobs data, and traders remained wary
because a robust employment number could raise expectations for
a U.S. interest rate hike.
Spot gold <XAU=> was bid at $1,121.20 an ounce at 1030 GMT,
against $1,131.40 late in New York on Thursday. U.S. gold
futures for February delivery <GCG0> on the COMEX division of
the New York Mercantile Exchange fell $12.20 to $1,121.50.
Bullion prices have benefited from low U.S. interest rates
in the last year, which have contributed to weakness in the
dollar and cut the opportunity costs of holding non-interest
bearing assets such as gold.
A rate hike, which is likely to come when data shows a
pick-up in economic activity, could therefore hurt gold prices.
"This year gold is going to be following U.S. interest
rates, and it is going to be following the dollar," said Jeremy
East, Standard Chartered's global head of commodity derivatives
trading.
"The play for gold is speculating on the move in U.S.
interest rates," he said. "(The payrolls data) will obviously
have an impact on expectations for that."
The median of forecasts in a Reuters poll of 84 economists
called for payrolls to remain steady in December after 11,000
jobs were cut in November. []
The dollar was well supported on Friday on expectations for
the payrolls figure, although it retreated from early highs to
hold steady against the euro. []
Strength in the U.S. unit curbs gold's appeal as an
alternative asset and makes dollar-priced commodities more
expensive for holders of other currencies.
Other commodities also retreated ahead of the data, with oil
prices inching down 0.4 percent. Gold often takes a cue from
other commodity prices, especially crude, as the metal can be
bought as a hedge against oil-led inflation. []
INVESTMENT SOFT
Investment demand for gold-backed exchange-traded funds also
remained soft after a lacklustre start to the new year. The
largest gold ETF, New York's SPDR Gold Trust <GLD>, reported a
further 0.4 tonne dip in its holdings on Thursday. []
Its holdings have fallen 10 tonnes in 2010 so far, while
those of London-based ETF Securities' gold-backed exchange
traded products are down 19,000 ounces in the same period.
Among other precious metals, spot silver <XAG=> tracked gold
lower to $18.05 an ounce against $18.22. Platinum <XPT=> was at
$1,539.50 an ounce versus $1,554.50, while palladium <XPD=> was
at $423 an ounce against $424.
The United States' first platinum- and palladium-backed ETPs
are due to start trading in New York later on Friday, which will
allow U.S. investors to invest in the metals used in
autocatalysts via an ETP. []
"Both (platinum and palladium) could gain serious traction
should ETF investment demand prove strong," James Moore, an
analyst at TheBullionDesk.com, said in a note.
Investment appetite for the metals is expected to be firm
this year as a turnaround in the global economy lifts car
demand. Over half the world's platinum and palladium is consumed
by carmakers.
China sold more than 13.5 million vehicles in 2009, the
official Xinhua news agency said on Friday, overtaking the
United States to become the world's largest auto market as
government policy initiatives spurred demand. []
(Editing by Sue Thomas)
