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PRECIOUS-Gold slips to 1-wk low as US jobs data boosts rate-hike prospects

Published 08/08/2016, 04:58 pm
Updated 08/08/2016, 05:50 pm
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* Gold may test resistance at $1,339 -technicals

* Silver touches near 2-week low (Adds comment, updates prices)

By Sethuraman N R

Aug 8 (Reuters) - Gold inched down to a fresh one-week low on Monday, after falling about 2 percent in the previous session, as stronger-than-expected U.S. jobs data increased the possibility of a rate hike this year by the Federal Reserve.

U.S. employment rose more than expected for the second month in a row in July and wages picked up, bolstering expectations of faster economic growth, and raising the probability of an interest rate increase this year. gold XAU= fell 0.2 percent to $1,332.80 an ounce by 0649 GMT, after dipping to as low as $1,331.36, the lowest since July 29.

U.S. gold GCcv1 edged down 0.5 percent to $1,338.40 an ounce.

"Gold prices have fully digested the nonfarm payrolls data," said OCBC Bank analyst Barnabas Gan.

"The U.S. economic fundamentals have picked up. But, the downside risks from whatever is happening from the Brexit is still unknown. Another uncertainty that market watchers will be looking at would be the U.S. presidential elections."

Spot gold may test resistance at $1,339 per ounce, with a good chance of breaking above this level and bouncing more towards the next resistance at $1,346, according to Reuters technical analyst Wang Tao.

There was a mix of short covering and bargain hunting on Monday before sellers wrestled back control, said MKS PAMP Group trader Sam Laughlin.

Traders and top Wall Street banks expect the Fed to raise U.S. interest rates in 2016 after a strong July jobs report. 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.

Speculators added net longs in gold futures for the first time in four weeks in the week to Aug. 2. of SPDR Gold Trust GLD , the world's largest gold-backed exchange-traded fund, rose 0.73 percent to 980.34 tonnes on Friday. GOL/ETF

"We may be seeing a turning point setting in for both gold and silver, as the impact of the nonfarm payroll number cannot be dismissed," INTL FCStone analyst Edward Meir said in a note.

"This will now prompt investors to look for an increasingly aggressive Fed going into the second half of the year."

Among other precious metals, spot silver XAG= hit a near 2-week low and was down 0.3 percent at $19.60 an ounce. It fell 3 percent on Friday.

Spot platinum XPT= was up 0.1 percent at $1,143.50. Palladium XPD= was slightly down at $693.25.

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