Gold prices edged lower on Thursday as investors returned to risky assets after upbeat U.S. jobs data, lifting equities in Asia to a seven-week high, although strong inflows into gold funds limited losses in the metal.
Gold, which has gained nearly 17 percent this year to be among the top performing commodities, was trading not far below a one-year peak.
Spot gold was off 0.2 percent at $1,237.65 an ounce by 0143 GMT, after rising 0.7 percent on Wednesday. The metal hit a one-year high of $1,260.60 on Feb. 11 as uncertainty in the global economy sharpened investor demand for safe havens.
Michael McCarthy, chief market strategist at CMC Markets, said he was a bit surprised that gold had risen overnight given the shift back to risky assets.
He noted gold could come under pressure as global risk appetite increases.
“It’s clear from the selling of bonds that the safe haven aspect of the investment market is less desirable than it was a few days ago,” said McCarthy.
U.S. gold for April delivery dropped 0.3 percent to $1,238.60 an ounce.
Keeping a lid on gold’s losses are continued strong inflows into exchange-traded funds (ETF). Holdings of SPDR Gold Trust , the world’s largest gold-backed ETF, rose to 25.35 million ounces on Wednesday, the most since September 2014.
Still, Asian shares and oil prices edged higher following a report showing U.S. private sector jobs rose 214,000 in February, beating market forecasts and lifting expectations for the more comprehensive U.S. nonfarm payrolls due out on Friday.
U.S. nonfarm payrolls, which include both public and private-sector employment, are estimated to have risen by 190,000 last month after increasing by 151,000 in January, according to a Reuters poll of economists.
“There is likelihood of positive surprise on Friday and that will also add to the weight on gold,” said McCarthy.
Spot palladium was down 0.8 percent at $511.22 an ounce while platinum and silver were flat at $931.90 and $14.925, respectively.