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CORRECTED-PRECIOUS-Gold hits two-week high as chances of early Fed rate hike dim

Published 06/06/2016, 02:47 pm
© Reuters.  CORRECTED-PRECIOUS-Gold hits two-week high as chances of early Fed rate hike dim
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(Corrects first paragraph to say gold had biggest one-day gain in previous session in nearly four months not three.)

BENGALURU, June 6 (Reuters) - Gold rose to its highest in nearly two weeks early on Monday, adding to its biggest one-day gain in nearly four months in the previous session when weak U.S. employment data sharply cut the chance of a near-term U.S rate hike.

FUNDAMENTALS

* Spot gold XAU= was up 0.2 percent at $1,246.10 per ounce by 0052 GMT. It reached a high of $1,248.40, its best since May 24. Bullion soared about 2.8 percent on Friday, its biggest one-day percentage gain since Feb. 11.

* U.S. gold GCcv1 climbed 0.5 percent at $1,248.90

* Asian shares rose on Monday and the dollar wallowed close to its lowest in nearly a month after U.S. nonfarm payrolls showed the slowest job growth in more than five years. MKTS/GLOB

* The dollar index .DXY stood at 94.12, having been as low as 93.855 on Friday - a level last seen on May 12. USD/

* The U.S. economy created the fewest number of jobs in more than 5-1/2-years in May as manufacturing and construction employment fell sharply, which could make it harder for the Fed to raise interest rates. Wall Street's top banks unanimously expect the Federal Reserve to leave interest rates unchanged this month, a Reuters poll showed on Friday, with bank economists pointing to a weakening U.S. employment scene and Britain's pending vote on remaining in the European Union. Investors will be looking for signals from Fed chair Janet Yellen this week about the U.S. central bank's next rate move. At an event on Monday in Philadelphia, Yellen gets her last chance to offer insight into Fed thinking before a media blackout takes effect ahead of the June 14-15 monetary policy meeting. Hedge funds and money managers reduced their bullish position in COMEX gold contracts in the week to May 31, when prices fell to 3-1/2-month lows on heightened expectations for a U.S. interest rate hike, government data showed on Friday. Holdings in SPDR Gold Trust GLD , the world's largest gold-backed exchange-traded fund, rose 0.71 percent to 881.44 tonnes on Friday, the highest since October, 2013.

* The latest disappointing U.S. jobs number has not changed the overall economic picture and gradual rate hikes remain appropriate, Cleveland Federal Reserve President Loretta Mester said on Saturday. South Africa's Lily gold mine will remain closed until the bodies of three trapped miners are recovered and the operation can be run safely, mines minister Mosebenzi Zwane said on Friday. For the top stories on metals and other news, click TOP/MTL or GOL

DATA AHEAD (GMT)

0830 EZ Sentix index

1400 U.S. employment trends

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