Spot gold prices moved in a $4 range early Friday, reaching lunchtime in London little changed from Thursday's sell-off at $649.50 per ounce.

"As the gold market continually fails to make its mark above the 100-day moving average," says the latest technical analysis from Standard Bank in Johannesburg, "it should remain under pressure in the near term.

"Momentary support should exist in front of $645 and the key 200-day moving average, currently around $643."

On the currency markets, the Dollar continued to push back Sterling and Euros following Thursday's much-stronger than expected US employment data from the ADP consultancy.

Showing a gain of 150,000 jobs against 97,000 forecast, the ADP report was followed today by June's official non-farm payrolls number. It showed a gain of 132,000 against 120,000 forecast by Wall Street.

"A lot of people wanting to buy gold were waiting for lower US interest rates," says Michael Widmer, head of metals research at Calyon in London. But after the latest jobs data, "it doesn't seem as if the Fed will pull that off in the next few weeks. So it's tough to take a bullish position on gold."

Bond investors were also hurt by the jobs data, with US Treasuries heading for their largest week-on-week drop in a month according to Bloomberg. The 10-year yield has risen 12 points as bond prices have dropped, hitting 5.14% just ahead of Friday's New York open.

Those higher rates encouraged fresh Dollar buying on the currency markets, where Sterling fell below $2.0070 despite strong industrial production numbers that appeared to justify Thursday's decision to raise Bank of England lending rates to a six-year high.

The Euro also fell, dropping as low as $1.3570 mid-morning. That helped keep the Euro price of gold above €476.50 per ounce. But Widmer at Calyon notes that the correlation coefficient between gold and the Euro now stands at 0.94 for this month so far, up from 0.50 in June.

A reading of 1.0 would mean spot gold bullion and the Euro moving in perfect lock-step.

"It looks like that $650 level is back to haunt us again," writes Phil Smith for Reuters Technical in India, "with the market stuck around there yet again after bouncing off the  upper channel of its current downtrend."

In the physical bullion market, the German refining giant Heraeus says that "traders reported this week from various countries including Indonesia, India, China and Germany that despite the recent drop in price, the interest by retail customers, be it for physical investment metal or for jewelry, remains down."

Looking ahead, however, the current lull in physical gold demand – particularly in India and China – may soon be reversed.

"Good rains forebode a good harvest that will boost agricultural income, helping farmers to buy more gold this year," reckons James Steel, metals analyst at HSBC – and Mumbai's Met. Office reports June rainfall was 7% above average.

India's gold demand accounted for one ounce in every five sold anywhere in the world last year. It may be set to hoover up physical gold from the international market once again after August, driven by a slew of festivals and the post-harvest wedding season.

"We look at gold as a barometer of wealth in the world," said Jason Mraz, head trader at Ospraie Management – the New York hedge fund running $7 billion in commodities and basic industries – at the Commodity Investment Summit in London last week. "The underpinning of demand is very strong."

"Most commodities in China still look extremely bullish, and China's influence looks fairly positive," adds Adam Rowley, a commodities analyst with Macquarie Bank in London. "On trend, we would see China as an unstoppable force in these markets."

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