Gold edged lower on Friday as the dollar strengthened against the euro in the wake of U.S. December non-farm payrolls numbers, but reaction to the data was muted as it came in broadly in line with expectations.

Spot gold slipped to $850.65/852.65 an ounce at 1415 GMT from $856.10 late in New York on Thursday.

U.S. gold futures for February delivery on the COMEX division of the New York Mercantile Exchange fell $2.80 to $851.70.

A government report showed U.S. employers slashed payrolls by 524,000 in December, driving the unemployment rate to its highest level in nearly 16 years.

Analysts polled by Reuters had expected a reduction of 550,000 jobs in December.

“The non-farm payrolls were only a few thousand off consensus, so that took some of the surprise away from the market,” said BNP Paribas metals analyst Michael Widmer.

Gold is taking its cues predominantly from the currency markets. The dollar turned higher against the euro in choppy trading after the data, with the single currency hitting a session low of $1.3588.

A stronger dollar tends to pressure gold, which is often bought as an alternative asset to the U.S. currency and tends to move in the opposite direction to it.

While the data was very poor, Widmer said, recent economic reports from the euro zone economies have also been weak, leaving both the dollar and the euro lacking support.

Oil prices, which also tend to influence gold, slipped more than $1 a barrel after the data to below $41 a barrel, as the rise in unemployment deepened gloom over the demand outlook in the world’s largest oil consumer.

In the longer run, concern over the prospects for the global economy continue to support gold as a haven from risk.

However, jewelery buying is relatively lackluster and strong demand for investment coins and bars is said by traders to have slackened since its autumn peak.

In India, the world’s leading market for gold jewelery, buying remains muted with prices at relatively high levels.

“There is hardly any demand at these prices,” said Mayank Khemka, managing director of bullion importer Khemka International in Delhi.

FORECAST CUT

Platinum has posted modest gains since the beginning of the year after a sharp sell-off in the last nine months of 2008, which knocked prices down 65 percent from their March highs.

However, it is still likely to suffer in 2009 from falling demand from carmakers, the major consumers of the white metal.

Investec cut its 2009 platinum forecast by 28 percent to $970 an ounce, although it said it remains positive on the longer-term outlook.

“We see downside risk to the platinum price in the near-term,” it said. “The outlook for vehicle sales, which accounts for 50 percent of platinum and palladium demand and 80 percent of rhodium demand, remains very poor.”

Spot platinum was quoted at $978/988 an ounce, down slightly from $991.50 late in New York on Thursday, while palladium was at $191.50/196.50 an ounce from $194.50.

Spot silver was at $11.09/11.17 an ounce against $11.08.

The world’s largest silver-backed exchange-traded fund, the iShares Silver Trust (SLV) , said its bullion holdings rose 1 percent or just over 55 tonnes on January 8.

LONDON, Jan 9 (Reuters)