Gold tumbles as dollar strengthens


London - Gold prices fell 2 per cent to session lows in Europe on Monday, on selling prompted by the dollar's rise to a five-week high versus the euro following above-consensus jobs data in the previous session.


Spot gold was bid at $1,147.85 an ounce at 1031 GMT, against $1,159.55 late in New York on Friday. Earlier it hit a two-week low of $1,135.80 an ounce, but quickly bounced.


Friday's much better-than-expected non-farm payrolls data prompted speculation the U.S. Federal Reserve may lift interest rates from their current historic lows sooner rather than later, which could help the dollar and cut support for gold.

U.S. gold futures for February delivery on the COMEX division of the New York Mercantile Exchange fell $21.40 to $1,148.10 an ounce.


The dollar hit a five-week high against the euro and a currency basket on Monday. The U.S. currency has been depressed for much of the year on the view that U.S. rates will stay low while those elsewhere rise.


Strength in the U.S. unit cuts gold's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.


Other commodities also fell, with oil prices easing below $75 a barrel, tracking weaker equities. European shares slipped with shares of UK lenders pressured by the possibility of a tax on bankers' bonuses.


Gold tends to track crude prices, as the metal can be bought as a hedge against oil-led inflation.


On the investment side, the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings eased 1.524 tonnes to 1,129.966 tonnes on Friday.


Among other precious metals, silver was at $18.16 an ounce against $18.43, while platinum was at $1,428 versus $1,440.50 and palladium at $363.50 versus $371.


ETF Securities' said holdings of its palladium-backed exchange-traded product rose 1.25 per cent to a record 640,483 ounces on Friday.

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