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PRECIOUS-Gold hits lowest since June 24 on U.S. rate prospects

Published 07/10/2016, 01:17 am
© Reuters.  PRECIOUS-Gold hits lowest since June 24 on U.S. rate prospects
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* Friday's U.S. payrolls report in focus

* Silver and platinum hit more than three-month lows

* GRAPHIC-2016 asset returns: http://reut.rs/1WAiOSC (Releads with U.S. data, updates prices, adds comment)

By Clara Denina

LONDON, Oct 6 (Reuters) - Gold slipped to a more than three-month low on Thursday, pressured by a stronger dollar after a fall in U.S. weekly jobless claims and ahead of more jobs data that could put the Federal Reserve on track to raise interest rates by year-end.

Initial claims for state unemployment benefits unexpectedly declined by 5,000 to a seasonally adjusted 249,000 for the week to Oct. 1. gold XAU= hit $1,252.11 an ounce, its lowest since June 24, the day after Britain's vote to leave the European Union. By 1409 GMT it was down 0.8 percent at $1,255.97.

The metal had registered its biggest daily loss in three years on Tuesday and touched its lowest since June 24 at $1,261.59 in the previous session after forecast-beating U.S. manufacturing data and comments from Fed officials saying there was a strong case for raising rates.

"Strong U.S. data and speeches of FOMC members that the Fed might raise rates before the year is out and then rumours about the ECB tapering its stimulus ... indicate more downside pressure in the short term as speculators keep liquidating long positions," Commerzbank (DE:CBKG) analyst Daniel Briesemann said.

Markets will now focus on Friday's U.S. non-farm payrolls report, which is expected to show 175,000 jobs added, according to the median estimate of 100 economists polled by Reuters.

"A surprise on the upside (of the labour numbers) will make market watchers expect an even higher probability of a rate hike, and that could bring gold prices down," OCBC Bank analyst Barnabas Gan said.

Other data this week showed that U.S. services sector activity rebounded to an 11-month high in September, prompting traders to price in close to a 65 percent chance of a interest rate increase in December. is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion while boosting the dollar, in which it is priced.

Bullion was still on track for a 19 percent increase this year, having benefited from uncertainty over the path of U.S. rates.

It touched a two-year high of $1,374.91 in July as investors sought refuge from volatility across financial markets after Britain's Brexit vote.

Gold's losses dragged the rest of the complex lower, with silver XAG= and platinum XPT= also touching their lowest since June 24 at $17.34 and $961.90 respectively.

Palladium XPD= was down 1.8 percent at $664.20.

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