February 9, 2015 / 4:06 AM / 3 years ago

PRECIOUS-Gold gains on weaker Asian shares, still near 3-wk low

* Asian shares fall on soft China data
    * Strong U.S. jobs data keeps pressure on gold
    * Chinese premiums edge higher

 (Updates prices)
    By A. Ananthalakshmi
    SINGAPORE, Feb 9 (Reuters) - Gold edged higher on Monday, as
Asian equity markets fell on disappointing Chinese economic
data, but the metal failed to make much headway from a
three-week low in the previous session due to worries over U.S.
interest rates. 
    Spot gold had gained 0.5 percent to $1,238.80 an
ounce by 0739 GMT as Asian shares slipped after dismal Chinese
trade data that raised concerns about a deepening slowdown in
the world's second-largest economy. 
    Bullion hit a three-week low of $1,228.25 on Friday, before
closing the session down 2.5 percent, after strong U.S. jobs
data that stoked expectations of a hike in interest rates. 
    "The small bounce we are seeing today is probably because of
the drop in equities but it may not hold," said Ronald Leung,
chief dealer at Lee Cheong Gold Dealers in Hong Kong.
    "The bigger factor influencing gold prices is still the
timing of the interest rate hike in the United States." 
    Data on Friday showed U.S. jobs growth rose solidly in
January and wages rebounded, a show of economic strength that
put a mid-year interest rate increase from the Federal Reserve
back on the table. 
    The U.S. central bank has held benchmark borrowing costs
near zero since December 2008, and some believe the jobs data
has raised the prospect it would push rates higher, despite
inflation running below its 2 percent target.
    Higher interest rates could dent demand for gold, a
non-interest-bearing asset, and boost the dollar. 
    Investor sentiment in bullion has taken a hit recently.
Hedge funds and money managers cut their bullish bets on gold
and silver futures and options for the first time in six weeks
during the week to Feb. 3, U.S. Commodity Futures Trading
Commission data showed on Friday. 
    In the physical markets, Chinese premiums rose to $4-$5 an
ounce on Monday, from less than $4 in the previous session, as
last week's sharp decline in prices attracted some buyers.
    But traders were not confident of support from the top
consumer over the next few days due to the upcoming Lunar New
Year holiday.
    Chinese consumers typically purchase gold for gift-giving
ahead of the new year holiday on Feb 19-20, but buying is likely
to slow during and just before the holiday itself, traders said.
    "With Chinese New Year nearly here, the buying activity
would have mostly concluded so don't expect much seasonal
support from the Chinese at this point," said Howie Lee, an
analyst at Phillip Futures in Singapore. 

    PRICES AT 0739 GMT      
 Metal           Last    Change  Pct chg
 Spot gold       1238.8    5.58     0.45
 Spot silver      16.74    0.05      0.3
 Spot platinum   1223.5    3.15     0.26
 Spot palladium  782.35     0.4     0.05
 Comex gold      1239.3     4.7     0.38
 Comex silver    16.765   0.071     0.43
 Euro            1.1341                 
 DXY             94.535                 
 COMEX gold and silver contracts show
 the most active months
 (Reporting by A. Ananthalakshmi; Editing by Michael Perry,
Richard Pullin and Biju Dwarakanath)
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