December 8, 2014 / 4:07 AM / 3 years ago

PRECIOUS-Gold stays below $1,200 as US jobs report boosts dollar

* Gold dropped more than 1 percent on Friday
    * Strong U.S. jobs data boosts dollar to over 5-year high
    * SPDR holdings rose on Friday, but still close to 6-year
low

 (Updates prices)
    By A. Ananthalakshmi
    SINGAPORE, Dec 8 (Reuters) - Gold stayed below $1,200 per
ounce on Monday, retaining overnight losses as a robust U.S.
nonfarm payrolls report boosted the dollar to a more than
five-year high, denting bullion's appeal as a hedge.
    Spot gold was steady at $1,194.40 an ounce by 0730
GMT, after losing 1.1 percent on Friday when data showed U.S.
employers added the largest number of workers in nearly three
years in November and wage gains picked up. 
    The dollar was trading close to its highest since March 2009
on the back of the strong jobs report. 
    Investors fear the strength in the economy could draw the
Federal Reserve closer to raising interest rates and decrease
demand for gold, a non-interest-bearing asset.
    "We suspect that gold will likely be at its most vulnerable
over next three to six months, which is when we see the highest
likelihood of a rate hike that should sweep the dollar higher,"
INTL FCStone analyst Edward Meir said.
    "In addition, the recent rout in energy prices will lower
inflationary expectations and increase real interest rates, yet
another reason that we would be cautious about gold's upside
potential."
    Gold prices tend to fall in tandem with oil as lower energy
prices is perceived to lower inflationary pressures. Bullion is
seen as a hedge-against raising prices.
    Oil prices fell on Monday to near their lowest levels since
2009 on oversupply worries, with more declines predicted by
analysts. 
    For now, some market players say gold could hold near $1,190
levels on recent data on investor positioning.    
    Hedge funds and money managers boosted their bullish
position in U.S. gold contracts to the highest since August in
the week to Dec. 2, data shows. 
    Holdings in SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, rose 0.12 percent to 720.91
tonnes on Friday, though still close to a six-year low.
 
    "There looks to be some underlying strength in the market
however, as the yellow metal convincingly held $1,180 on Friday
following the nonfarm payroll print," said Sam Laughlin, metals
dealer at MKS Group.
    Immediate support will come in around $1,186, while on the
topside $1,210-$1,220 will provide resistance, he said. 
        
    PRICES AT 0730 GMT
 Metal            Last     Change  Pct chg
                                   
 Spot gold         1194.4    2.65     0.22
 Spot silver        16.26    0.01     0.06
 Spot platinum       1226    11.2     0.92
 Spot palladium     801.5    3.46     0.43
 Comex gold        1194.4       4     0.34
 Comex silver      16.285   0.027     0.17
 Euro              1.2282                 
 DXY               89.401                 
                                   
 COMEX gold   and silver contracts show
 the most active months
 
 (Editing by Himani Sarkar and Anupama Dwivedi)

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