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PRECIOUS-Gold slips after best day since April as dollar strengthens

Published 12/05/2016, 11:49 pm
© Reuters.  PRECIOUS-Gold slips after best day since April as dollar strengthens
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* Prices consolidate below 15-month peak of $1,303.60/oz

* Gold up 20 pct this year as expectations of Fed hike fade

* Global gold demand posts strongest Q1 on record - WGC (Updates prices, adds comment)

By Jan Harvey

LONDON, May 12 (Reuters) - Gold eased on Thursday as a strengthening dollar prompted some buyers to cash in gains after its biggest daily rise this month, though it pared losses after downbeat U.S. jobs data.

Pressure on gold, which slipped as low as $1,265.26 in earlier trade, abated after data showing U.S. jobless claims hit their highest level in more than a year last week dampened the dollar's upward movement.

That helped lift gold from a session low of $1,265.26 an ounce. Spot gold XAU= was down 0.2 percent at $1,274.80 an ounce at 1336 GMT. The metal touched a 15-month high last week at $1,303.60, before slipping back below $1,300.

"The weakness in gold which we're experiencing today is mainly due to the strength in the dollar, and also we're approaching close to a very important level of $1,300," Naeem Aslam, chief market analyst at Think Forex, said.

The dollar index .DXY rose 0.1 percent on Thursday, supported by a drop in the yen as investors sold the currency amid speculation the Bank of Japan could decide to expand its monetary stimulus as soon as next month. FRX/

Gold has climbed nearly 20 percent this year as a run of soft economic data in the United States and around the world allayed expectations that the Federal Reserve would press ahead with interest rates in the near term.

Rising rates increase the opportunity cost of holding non-yielding gold, while boosting the dollar, in which it is priced.

Underlining optimism towards the metal, holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Shares GLD , rose 2.7 tonnes to 841.9 tonnes on Wednesday, the highest since December 2013. HLDSPDRGT=XAU

Surging inflows into gold-backed exchange-traded funds drove global gold demand to its highest first-quarter total on record this year at 1,290 tonnes, the World Gold Council (WGC) said, despite a near 20 percent drop in jewellery demand. was pleasing to see the strong uptick in physical demand for gold in the first quarter of 2016... especially in Western financial centres that have effectively been absent for three years," Old Mutual Gold & Silver Fund manager Ned Naylor-Leyland said.

"In view of the diminishing physical float underpinning the very large London 'over the counter' paper gold market, we see the trend for physical gold ownership in the West as signalling an important structural change."

U.S. gold futures GCv1 for June delivery were up 0.1 percent at $1,276.50. Spot silver XAG= was down 0.3 percent at $17.35 an ounce, platinum XPT= was flat at $1,063.40, and palladium XPD= was up 0.1 percent at $605.35.

GFMS analysts at Thomson Reuters said in a report on Thursday that platinum was likely to have already posted its lows for the year, with a return to supply shortfalls set to hold the metal at an average $1,005 an ounce in 2016.

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