SYDNEY -- Gold edged higher on Friday, as the European Central Bank's bigger-than-expected interest rate outweighed selling pressures triggered by a stronger US dollar and weaker oil.
Dismal US jobs data due out later on Friday, which is likely to encourage the US Federal Reserve to cut rates to just 0.5 percent this month, could see the dollar weaken again, potentially sparking more buying, bullion dealers said.
"If the dollar heads down again on jobs, that will bring out more buying in Europe," said a gold dealer in Sydney who asked not to be named.
The dollar turned up against the euro as investors covered their short positions after earlier weakening on lingering expectations the ECB's 0.75 percentage point rate cut would help shore up the euro zone economy, sweeping gold higher in its wake on arbitrage buying.
Spot gold was at $769.95 an ounce by 0744 GMT versus New York's late Thursday price of $767.30.
Signalling declining prospects of inflationary threats, oil fetched around $44 a barrel, its lowest in almost four years.
Anti-inflationary signs typically erode bullion's investment appeal as a protector of wealth during periods of financial uncertainty.
This was reinforced by a drop in the broad-based commodity index Reuters/Jefferies CRB overnight to a six-year low, led by a fall in crude oil futures.
The US economy is forecast to have lost 340,000 jobs in November, which would be the worst monthly job loss since 1982, according to economists polled by Reuters.
After peaking at around $831 last week, gold has retreated to under $770, which is 28 percent below bullion's all-time high of $1,030.80 hit in March.
"This follows a period of low volatility and consolidation for the metal as prices traced out a small triangle reversal pattern," Sydney research group Fat Prophets said. "Following the initial break higher, we were looking for a short-term target of $858, however, a period of choppy consolidation between $750 and $840 is now a more likely outcome," it said in a report.
US gold futures for February delivery rebounded in electronic trade to $767.80 an ounce after settling down $5.00 at $765.50, on the COMEX division of the New York Mercantile Exchange.
Spot platinum rose to $795.00 an ounce against $786.50 late on Thursday, despite a year-on-year 7.6 percent drop in China's passenger car sales in November.
Platinum, used in making vehicle catalytic converters, may have been oversold since declining from a recent peak of $874 an ounce on Dec. 1, a trader said.
Spot palladium traded at $170.00 an ounce versus $166.50, while spot silver gained six cents to $9.52 an ounce.
