PRECIOUS-Gold pares losses after US jobs data

LONDON, June 1 (Reuters) – Gold pared losses on Wednesday
after U.S. private-sector jobs data cast doubt on the health of
the world’s largest economy and undermined the dollar.
Earlier, gold retreated after European officials met to work
on a second bailout package for Greece, which boosted the euro,
but also whet investor risk appetite, offsetting any potential
lift to gold prices from the resulting weakness in the dollar.
A separate report showed growth in U.S. private-sector
payrolls slowed sharply in May, falling to its lowest level in
eight months, just two days before a key monthly government
report on employment.
Gold in euros fell earlier to its lowest since May 20 before
recovering to show a 0.1 percent gain on the day, while gold in
dollars was at $1,532.20 an ounce at 1401 GMT from $1,534.65
late in New York on Tuesday.
“The various elements involved are stepping back a bit from
the brink again and that, you would expect to take a little bit
of the edge off gold for sure, but at the same time, it’s seen
the euro come back against the dollar and that is benefiting
gold,” said Credit Suisse analyst Tom Kendall.
“A resolution, which is expected now in the next two to
three weeks, should take some of the froth off gold but it’s
swinging around on sentiment at the moment and swinging around
on the foreign exchange markets.”
Gold fell by about 2 percent in May, although the price
remained on track for a near-8 percent gain this year, fuelled
in large part by investor nerves over the euro zone’s finances.
The price of gold in euros hit a life-time high of 1,088.11
euros an ounce last week and a record high in dollars of
$1,575.79 an ounce in early May, just before a major sell-off
across the commodities complex.

NO ETF INFLOWS
Investor demand for gold retreated in May, as reflected in
the net outflow of metal from global exchange-traded funds,
which fell nearly 1 percent last month in their first monthly
decline since February.
“Technically, it looks like that gold might be going low,
but I don’t see any justification for it to break much below
$1,520,” said Darren Heathcote, head of trading at Investec
Australia. “I don’t think we are close to having it (the Greek
debt crisis) completely solved yet, and the market will remain
sceptical and well supported.”
Mexico’s central bank moderately expanded its gold holdings
in April, buying 190,000 ounces of gold, worth nearly $282
million based on average spot price of the month, after buying
more than $4 billion in bullion in March.
Investors are also looking ahead to U.S. non-farm payrolls
data due on Friday for evidence of the ability of the world’s
largest economy to generate jobs, after sluggish data on
Wednesday suggested U.S. growth was losing momentum.
Spot silver was down 1.98 percent at $37.69 an ounce.
U.S. July silver futures fell 1.5 percent to $37.72, having
fallen by more than 20 percent in May.
ETF holdings of the metal fell for a second consecutive
month in May, dropping by more than 40 million ounces to their
lowest this year.
The London Bullion Market Association said it would launch a
silver forward price curve with immediate effect. This follows
the launch of its gold forward price curve in January this year.

Palladium was last up 0.5 percent at $778.22 an ounce from
$774.10 an ounce on Tuesday and platinum was at $1,822.00 an
ounce compared with $1,828.10 the day before.