June 5, 2017 / 7:48 PM / 2 months ago

PRECIOUS-Gold prices hit highest since April after weaker U.S. jobs data

    * Dollar hovers close to seven-month low
    * Palladium hits near three-year peak
    * Silver marks highest since April 26

 (Adds comments, data, updates prices; adds NEW YORK dateline)
    By Devika  Krishna Kumar and Zandi Shabalala
    NEW YORK/LONDON, June 5 (Reuters) - Gold prices steadied
after rising to a fresh six-week high on Monday as disappointing
jobs data dimmed the prospects for aggressive U.S. interest rate
increases, even though it was unlikely to deter a rate hike at
this month's Federal Reserve policy meeting.
    U.S. job growth slowed in May and employment gains in the
prior two months were not as strong as previously reported, data
showed on Friday, suggesting a loss of momentum in the labor
market.             
    U.S. interest rates futures were little changed as a private
measure of U.S. services industry activity fell in May within
analyst forecasts, with prices declining for the first time
since February 2016. Federal funds futures implied traders saw a
96 percent chance the Fed would raise key overnight borrowing
costs at its policy meeting next week.             
    Higher interest rates put pressure on gold prices by
increasing the opportunity cost of holding non-yielding bullion.
    Spot gold        was steady at $1,279.11 per ounce by 3:17
p.m. EDT (1917 GMT), after climbing 1.1 percent on Friday. It
hit a peak of $1,283.27 early in the session, its highest level
since April 21.
    U.S. gold futures         rose 0.2 percent to settle at
$1,282.70.
    "The weaker-than-expected U.S. employment report, released
on 2 June, boosted gold prices, but has not derailed the
likelihood of a rate hike at the June FOMC meeting," Standard
Chartered analysts said in a note. 
    U.S. event risk is unlikely to subside before the next FOMC
meeting (14 June) given the Comey testimony takes place this
week; but across the pond the UK general election and European
Central Bank meeting take place on 8 June."
    Early in the session, gold, seen as a safe-haven, was higher
after assailants, in Britain's third Islamist attack in as many
months, killed at least seven people in the heart of London.
            
    British Prime Minister Theresa May resumes campaigning on
Monday for the national election due in three days. The vote is
expected to be much tighter than previously predicted.
            
    "(European elections have) been an underlying supportive
factor for some time, providing some good safe-haven buying but
not enough to spark any panic buying. That's why we think things
will be relatively subdued," ANZ analyst Daniel Hynes said.    
    The dollar index, which tracks exchange rates against a
basket of six major currencies, kept a lid on gains in bullion
by edging higher on Monday. It rose about 0.10 percent after 
hitting a roughly seven-month low of 96.654 Friday.       
    Elsewhere, palladium        hit its strongest level since
September 2014 at $849.40.
    UBS analyst Giovanni Staunovo said it was likely that
technical factors had supported palladium in recent days after
the market broke through a previous high. 
    "I am a little bit cautious in the near term and expect
setbacks due to elevated speculative positioning and relatively
weak car (sales) in the main palladium markets."
    Silver        hit a high of $17.64 an ounce, its strongest
since April 26. Platinum        was little changed at $952.

 (Additional reporting by Vijaykumar Vedala in Bengaluru;
Editing by Dale Hudson and Tom Brown)
  

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