Gold retreats from 11-week peak ahead of U.S. payrolls data

By Jan Harvey

LONDON (Reuters) - Gold eased back from the previous session's 11-week high on Friday ahead of U.S. payrolls data for January due later and as the dollar recovered some lost ground against the euro and yen.

The metal hit its highest since Nov. 17 on Thursday at $1,225.30 an ounce after a Federal Reserve policy statement that disappointed investors hoping for clearer signs on interest rate hikes knocked the dollar to a 12-week low.

The U.S. currency recovered some poise ahead of the payrolls numbers due at 1330 GMT, helping to push spot gold 0.4 percent lower to $1,211.60 an ounce by 1230 GMT.

U.S. gold futures for April delivery were down $5.90 an ounce at $1,213.50.

"A lot today is going to hinge on the macroeconomic news, particularly the non-farm payrolls," Mitsubishi analyst Jonathan Butler said. "If we see another positive number, that could argue in favour of a rate hike during the first half of this year, and that may put some downward pressure on gold."

A Reuters survey of economists suggested that non-farm payrolls probably increased by 175,000 jobs last month, picking up from the 156,000 jobs added in December.

Though markets are predicting a move in June, a strong U.S. payrolls report would increase the possibility of a rate increase as early as March.

Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Shares, rose for a second day on Thursday by 1.5 tonnes to 811.22 tonnes.

However, interest in gold in major consumer Asia was muted overnight, MKS said in a note, despite the return of Chinese buyers to the market after the Lunar New Year holiday.

"With China returning for their first day's trade in a week, it was surprising to see very little interest one way or the other from them," it said.

"Volumes were very light on the (Shanghai gold) exchange, and the premium throughout the morning remained around $13-15 over the spot price."

Silver was down 0.6 percent at $17.33, having reached its highest in more than 11 weeks at $17.73 in the previous session.

Platinum was down 1.3 percent at $986.80, having hit a 12-week high of $1,011.60 on Thursday, while palladium was 1.2 percent lower at $747.98.

(Additional reporting by Nallur Sethuraman and Arpan Varghese in Bengaluru; Editing by David Goodman and Mark Potter)