| NEW YORK
NEW YORK Gold held onto healthy gains on Wednesday in late trade, though off earlier one-month highs, as investors sought its safety after weaker U.S. manufacturing data and a private-sector jobs report for May.
The worrisome data from the Institute for Supply Management followed an early report showing the U.S. private-sector added only 38,000 jobs in May, which cast doubt on the health of the world's largest economy and undermined the dollar.
Spot gold was trading at $1,538.40 an ounce at 3:55 p.m. EDT (1955 GMT) after earlier hitting $1,550.14, its highest since May 3.
Benchmark August COMEX futures rose $6.40 to finished at $1,543.20 after earlier reaching its highest since May 2 at $1,551.60 an ounce.
"I think we're still with the safe-haven play on gold. Gold is the only thing that's still up today. People are a bit afraid of the weak economy and what happened to the dollar," said David Lee, precious metals trader at Heraeus Precious Metals Management in New York.
U.S. factory activity growth slowed in May to its lowest level since September 2009, suggesting a loss of momentum in the economy in the second quarter.
The discouraging manufacturing figures from the United States follow similar reports out of Europe and China.
A separate report showed growth in U.S. private-sector payrolls falling to its lowest level in eight months, just two days before a key monthly government report on employment.
Investors are looking ahead to U.S. nonfarm payrolls data due Friday for evidence of the ability of the world's largest economy to generate jobs, after sluggish data on Wednesday suggested U.S. growth was losing momentum.
Gold was vacillating in early business, but once the U.S. data was released, bullish action in the options pit spilled over to the futures market, causing a swift rally that held.
"You had some very bullish action in the options, which means we have to buy futures against it. We haven't seen stuff like this for awhile. But the economic numbers have been pretty awful," said independent metals trader, said Jonathan Jossen on the COMEX exchange floor in New York.
"With what's been going on in the world, I feel gold's been underperforming," he added.
Gold fell by about 2 percent in May, although the price remained on track for a near 8 percent gain this year, fueled in large part by investor nerves over euro zone finances.
The price of gold in euros hit a life-time high of 1,088.11 euros an ounce last week and a record high in dollars of $1,575.79 an ounce in early May, just before a major sell-off across the commodities complex. It was up sharply at 1,073.28 an ounce in late business.
GOLD ETFs SHOW OUTFLOW IN MAY
Investor demand for gold retreated in May, as reflected in the net outflow of metal from global exchange-traded funds, which fell nearly 1 percent last month in their first monthly decline since February.
Mexico's central bank moderately expanded its gold holdings in April, buying 190,000 ounces of gold, worth nearly $282 million based on average spot price of the month, after buying more than $4 billion in bullion in March.
White metals, used extensively in the manufacturing and auto sectors, fell sharply after the slower factory activity report and as many U.S. auto industry reported far weaker than expected sales for May.
Spot silver was sharply lower at $36.76 an ounce than $38.44 at Tuesday's close. U.S. July silver futures fell 4 percent to $36.77 in after-hours trade. Silver dropped over 20 percent in the month of May.
The London Bullion Market Association said it would launch a silver forward price curve following the launch of its gold forward price curve in January.
U.S. platinum and palladium futures were also down following declines reported for most major U.S. automakers.
In late dealings, benchmark platinum futures lost $12.70 to $1,821.30 per ounce and palladium futures tumbled $6.45 to $772.50 per ounce.
Spot palladium slipped to $769.47 an ounce from $774.10 an ounce on Tuesday, and platinum slid to $1,815.24 compared with $1,828.10 the day before.
(Additional reporting by Amanda Cooper, Rujun Shen and Pratima Desai; Editing by Lisa Shumaker)