LONDON, Jan 12 : Gold slipped 1 per cent on Monday as oil dropped and the euro extended losses against the dollar, while physical demand was seen softening.

We suspect that further dollar strength might put gold under pressure over the coming week, said analyst David Thurtell at Citi.

Investors awaited the European Central Bank’s policy meeting on Thursday, which could set the direction of the dollar amid expectations of more rate cuts keeping the euro on the defensive.

Gold was trading at $844.60 an ounce by 1025 GMT, down 1 per cent from $853.60 in New York late on Friday.

But physical demand was seen softening after holding firm in the normally very strong fourth quarter.

Gold has bounced more than 20 per cent since tumbling to a 13-month low around $680 in late October. Bullion struck a record $1,030.80 last March.

Oil dropped below $39 a barrel on persistent worries about falling demand following Friday’s dismal US payrolls report, which showed 1.1 million jobs lost since November and the highest unemployment rate since 1993..

Gold came off in line with the stronger dollar and the weaker oil price, a trader said, adding trading was calm on Monday.

On COMEX, speculative gold players boosted their net long positions to 133,604 at Jan. 6, up from 125,961 net longs at Dec. 30, Commodity Futures Trading Commission data showed.

The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust, said it held 787.60 tons of gold as of Jan. 9, down 0.28 tons from a record 787.88 tons on Jan. 7.

Holdings in the trust, which issues securities backed by physical stocks of gold, began climbing again in December after poor prospects for the global economy ignited demand for bullion as a safe-haven asset..

Platinum was trading at $989 an ounce, down from $992.50 in New York on Friday. Silver was at $11.09, from $11.24, and palladium was unchanged at $191.

New York gold futures fell $2.8 an ounce to $859.—Reuters