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PRECIOUS-Gold near 6-week low, poised for third weekly loss
August 1, 2014 / 3:41 AM / 3 years ago

PRECIOUS-Gold near 6-week low, poised for third weekly loss

* Gold retains 1 pct overnight drop
    * Physical demand fails to provide support
    * Coming up: U.S. Non-farm payrolls July at 1230 GMT

 (Updates prices)
    By A. Ananthalakshmi
    SINGAPORE, Aug 1 (Reuters) - Gold held near a six-week low
on Friday and was on track for a third straight weekly loss as
U.S. economic optimism offset any safe-haven demand from
geopolitical tensions.  
    The optimism stemming from a string of strong U.S. data is
likely to increase as the July nonfarm payrolls report scheduled
for release later in the day is expected to show the world's top
economy maintaining a solid pace of jobs growth. 
    Spot gold edged up slightly to $1,283.90 an ounce by
0632 GMT, after falling 1 percent in the previous session. It
hit $1,280.76 on Thursday - the lowest since June 19. 
    Gold was on track for a 2 percent fall for the week, after
posting its sharpest monthly drop of the year in July. The third
consecutive weekly drop would be gold's longest such losing
streak since September. 
    "Tonight's key nonfarm payrolls will be the decisive factor
for gold's next move," MKS Group said in a note. "The market is
expecting an addition of 230,000 jobs, if it is well above this
number gold is likely to continue to push lower, whilst the
yellow metal should find a bid if it's less than 200,000."
    A strong economy blunts gold's appeal as an alternative to
riskier assets such as equities. The precious metal's sharp
losses on Thursday were triggered by data showing U.S. labour
costs recorded their biggest gain in more than 5-1/2 years in
the second quarter. 
    Physical demand, however, failed to pick up in a robust way
despite the price drop on Thursday, a dealer in Hong Kong said.
    U.S. gold coin sales dropped about 40 percent in July from a
month ago. Chinese gold jewellery demand fell for the first time
in eight years in the second quarter and could drop as much as
20 percent in the full year, a leading precious metals
consultancy said.  
    Spot gold is expected to slip to $1,271 as it has broken
below a support at $1,284, Reuters technicals analyst Wang Tao
    Investors were also keeping an eye on geopolitical tensions
in the Middle East and Ukraine. 
    Israel and Islamist militant group Hamas agreed to a 72-hour
ceasefire in their conflict in the Gaza Strip starting on
Friday, while the European Union issued fresh sanctions against
Russia over Moscow's support for rebels in Ukraine. 
 PRICES AT 0632 GMT    
 Metal             Last     Change   Pct chg
 Spot gold          1283.9     1.81      0.14
 Spot silver         20.39     0.04       0.2
 Spot platinum        1461      6.6      0.45
 Spot palladium        873      6.3      0.73
 Comex gold         1283.6      2.3      0.18
 Comex silver        20.43    0.018      0.09
 Euro               1.3385                   
 DXY                81.497                   
 COMEX gold and silver contracts show the
 most active months
 (Editing by Himani Sarkar)

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