OREANDA-NEWS. February 06, 2015. Gold fell on Thursday as uncertainty in Greece after the European Central Bank said it would no longer accept Greek bonds in return for funding left investors on the sidelines.

The ECB's announcement dealt a blow to Athens which is seeking debt relief from euro zone lenders, knocking the euro down against the dollar in early trade.

Spot gold fell 0.6 percent to \\$1,262.10 an ounce by 1256 GMT, while U.S. gold futures for April delivery were down 0.2 percent at \\$1,262.50 an ounce.

Bullion failed to capitalise on a fall in European equities and was trading in a \\$10 an ounce range ahead of Friday's U.S. employment data.

The metal dipped despite the euro staging a modest rebound against the dollar after positive German data, which however kept it well below a two-week peak hit on Tuesday.

"It is unusual to see gold and the dollar move in the same direction but ... for the market to really care about what is happening in the euro zone we need to be closer to an exit of Greece than we have been in the past," Julius Baer analyst Carsten Menke said.

"You need to have a pretty dire assessment of the future and see the situation in the euro zone deteriorate to attract back those long-term investors who have exited gold in the past two years."

China's move on Wednesday to cut the reserve requirement for banks in an effort to add more liquidity to fight off an economic slowdown and looming deflation could however support demand for gold in the short term.

The metal has in the past benefited during periods of ultra-low interest rates and further monetary easing, which encourage investors to put money into non-interest-bearing assets.

But while major economies such as China and Europe continue to pump more money into their systems, the United States is moving towards a tightening cycle.

And investors will watch the U.S. non-farm payrolls for more clues on when U.S. interest rates would rise this year, the first hike in nearly a decade. A Reuters poll of analysts had forecast a 230,000 increase in U.S. jobs in January, slowing slightly from 252,000 in December but still robust.

"The entire notion right now is for the U.S. to continue improving at least from the labour front," said Barnabas Gan, analyst at OCBC Bank.

"Higher interest rates and a firmer dollar really are strong drivers to depress gold prices this year," said Gan, who sees bullion at \\$1,000 by year-end.

Spot silver fell 1.2 percent to \\$17.14 an ounce. Platinum was down 0.1 percent at \\$1,236.65 an ounce and palladium lost 0.3 percent to \\$786.50 an ounce.