NEW YORK/LONDON Gold fell in light trade on Thursday, snapping a three-day rally, as the bullion market took a breather after the previous session's sharp gains and ahead of Friday's key U.S. jobs report.
Palladium surged almost 4 percent, putting it on track for its largest four-day rise in a year, after encouraging November U.S. auto sales. The industrial metal is mainly used as autocatalyst for gasoline cars. It has gained 12 percent in the last three sessions.
Gold, a traditional safe haven, fell again in tandem with riskier assets. U.S. stock markets were down slightly as stronger-than-expected U.S. manufacturing data was not enough to excite investors a day after the Dow's best daily performance since March 2009.
Technical support boosted gold prices after the metal on Wednesday reclaimed key chart support of its 100-day average. A positive outlook on gold charts should underpin bullion in the near term, analysts said.
"The gold market is making higher lows and higher highs. That's definitely a firm technical trend to the up side," said Zachary Oxman, managing director of futures broker TrendMax.
Gold fell 0.2 percent to $1,742.49 an ounce by 2:10 PM EST, having earlier touched a two-week high of $1,754.
The metal ended November with a 2 percent gain, clocking up gains in seven out of 11 months so far in 2011, but was still 9 percent below September's lifetime high at $1,920.30.
On Wednesday, gold rose sharply with investors piling into bullion as a hedge against currency depreciation after central banks boosted liquidity for lenders.
"The long-term outlook was given a clearer picture as the monetary easing introduced yesterday showed how difficult the situation is in Europe and hints towards further action," said Carlos Perez-Santalla, precious metals broker at PVM Futures.
Perez-Santalla said that gold could test this week's low near $1,702 an ounce if it fails to close above its key chart support at its 100-day moving average near $1,723 an ounce.
US NONFARM PAYROLLS, EURO ZONE EYED
Global markets now await Friday's November nonfarm payrolls report for a snapshot of the health in the world's biggest economy. Economists are expecting a gain of 122,000 jobs. [ID:nN1E7AS0K8]
Bullion was supported after the new head of the European Central Bank signaled it stood ready to act more aggressively to fight Europe's debt crisis if political leaders agree next week on much tighter budget controls in the 17-nation euro zone.
The euro rose for a fourth straight session against the dollar, bolstered by generally successful Spanish and French debt auctions, although traders were inclined to view its gains as good selling opportunities.
Despite the divergence in gold and euro on Thursday, the 25-day correlation-log between gold and euro rose to 0.5, near its tightest positive link in a year.
In other precious metals, silver inched down 0.1 percent at $32.77 an ounce.
Platinum group metals received a boost after news U.S. auto sales rose sharply in November as more confident American consumers spent more on the average showroom purchase, extending a recovery trend for the industry to a sixth month.
Analysts expect overall U.S. car sales to be the highest since 2009. Both platinum and palladium prices had been battered during the third quarter on an uncertain global economic outlook.
Platinum was up 0.3 percent at $1,556.49 an ounce, while palladium rose 3.5 percent to $627.18 an ounce. Both are on track to post double-digit losses for 2011.
(Additional reporting by Rujun Shen in Singapore; editing by Bob Burgdorfer)