* Gold's worst weekly loss since May on economic optimism
* U.S. December nonfarm payrolls rise less than expected
* Indian gold imports seen jumping 64 pct in 2010
* Coming up: U.S. wholesale inventory on Tuesday
(Recasts, adds comments, updates market activity, changes
byline, new dateline, previously LONDON)
By Frank Tang
NEW YORK, Jan 7 (Reuters) - Gold dipped on Friday, set for
its biggest weekly decline since May after disappointing U.S.
jobs data failed to revive safe-haven demand.
Bullion declined for a fifth day, its longest losing streak
in seven months, although it closed up from a six-week low
after data showed U.S. employers hired fewer workers than
expected in December, and a surprise fall in the unemployment
rate was blamed on people giving up the search for
work.[]
The 4 percent decline this week has called into question
gold's lengthy bull run as traders look forward to a U.S.
economic recovery that Federal Reserve Chairman Ben Bernanke
said "may be taking hold" even if growth remains too weak to
put a real dent in the nation's jobless rate, although
continued jitters over the euro zone have limited the decline.
"Money is moving out of bonds and gold into the broader
equity market as investors are willing to take on more risks
thinking that economic conditions have improved," said Brian
Hicks, co-manager of Global Resources Fund <PSPFX.O> of the
$2.9 billion fund manager U.S. Global Investors.
Friday's payrolls data, however, showed there are still
economic challenges on the horizon, he added. Hicks said that
he expects gold to rangebound near term until the market finds
a new catalyst such as next Friday's U.S. consumer prices
data.
Spot gold <XAU=> fell 0.3 percent to $1,366.55 on ounce at
1:36 p.m. EST (1836 GMT), having earlier touched a low of
$1,352.30 an ounce, its weakest since Nov. 26.
Gold's upward trend has weakened after prices breached
below 50-day moving average for the first time since August,
but a rebound is possible if it can hold above key technical
support near $1,360 an ounce. []
On charts, gold has breached below two important support
levels, namely its 50-day average at $1,382 an ounce and its
December lows at the $1,360s, said Adam Sarhan, chief executive
of New York-based Sarhan Capital. (Graphic:
http://link.reuters.com/kat35r)
"At this stage of the game, gold is at a very important
inflection point. As long as gold holds above the $1,360s, we
should be able to see a bounce," Sarhan said.
JOBS DATA SHADES UPBEAT DATA
Prices bounced after Friday's jobs data dimmed some of this
week's optimism fueled by a raft of better-than-expected U.S.
data including purchasing managers' index, new factory orders
and upbeat private-sector jobs data.
However, a rise in the U.S. dollar to its highest in nearly
four months against the euro weighed.
U.S. gold futures for February delivery <GCG1> dropped $2
an ounce to $1,369.70.
Gold fell in tandem with other commodities this week as
some investors unwound solid gains made on thin volume in gold
and other precious metals over the holidays. Gold rose nearly 3
percent in December, and was up 29.6 percent last year.
But many dealers remain loath to give up on the
unprecedented 10-year rise in gold prices, saying they'll wait
for far more evidence of a sustained recovery and stability in
Europe.
"The United States has had a whole run of decent data, and
that has increased risk appetite and decreased gold's allure as
a hedge," said VM Group analyst Carl Firman.
"If you have a sustained period of good, positive U.S.
data, which points towards a good U.S. recovery, the dollar is
bound to strengthen slightly, and that is generally negative
for the gold price," he added.
Strong physical demand could also lift prices after recent
decline. The head of the Bombay Bullion Association told
Reuters that gold imports to India, the world's largest
consumer, are likely to jump 64 percent to 500-550 tonnes in
2011. []
Gold-backed exchange-traded funds continued to see
outflows, with holdings of the largest, New York's SPDR Gold
Trust <GLD>, falling to a seven-month low on Thursday.
[]
Silver <XAG=> dropped 1 percent to $28.76 an ounce.
Platinum <XPT=> slipped 0.1 percent at $1,727.24 an ounce,
while palladium <XPD=> eased 0.6 percent at $753.97.
Prices at 1:36 p.m. EST (1836 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCG1> 1369.70 -2.00 -0.2% -3.6%
US silver <SIH1> 28.745 -0.386 -1.3% -7.1%
US platinum <PLJ1> 1737.30 2.20 0.1% -2.3%
US palladium <PAH1> 754.10 -8.80 -1.2% -6.1%
Gold <XAU=> 1369.85 -1.30 -0.2% -3.6%
Silver <XAG=> 28.71 -0.33 -1.3% -7.1%
Platinum <XPT=> 1729.74 0.74 -0.1% -2.3%
Palladium <XPD=> 751.72 -6.78 -0.9% -6.0%
Gold Fix <XAUFIX=> 1367.00 9.00 0.7% -3.1%
Silver Fix <XAGFIX=> 28.39 -69.00 -2.4% -7.3%
Platinum Fix <XPTFIX=> 1735.00 19.00 1.1% 0.2%
Palladium Fix <XPDFIX=> 754.00 13.00 1.8% -4.7%
(Additional reporting by Jan Harvey in London; Editing by
Marguerita Choy)
