PRECIOUS-Gold slides on deflation worry after US jobs data

* Dismal US job growth fuels deflation concerns
* Investors focus on poor outlook instead of Fed easing
hopes
* Physical bullion demand subdued in Asia
* Coming up: U.S. consumer credit data on Monday

(Adds details, updates quotes, market activity)
By Frank Tang
NEW YORK, July 6 (Reuters) - Gold fell 1.5 percent on Friday
as a disappointing U.S. jobs report spurred deflation fears,
prompting investors to seek refuge in the perceived safety of
the dollar and sell gold along with commodities and equities.
Bullion dropped more than 1 percent for the week, as prices
slid on Friday after data showed U.S. nonfarm payrolls grew at a
less-than-expected pace in June. A $3 drop in
crude oil and a sell-off on Wall Street stirred fears of a
global economic slowdown which have recently heavily pressured
gold prices.
"Gold's decline today has to do with the notion that even
though the job report is very weak, the lack of conviction that
there will be another economic stimulus has caused a lot of
shorter-term gold investors to sell," said Jeffrey Sica, chief
investment officer of SICA Wealth Management with over $1
billion in assets.
Even though economists said the report would push the U.S.
Federal Reserve closer to additional monetary easing, which
should help gold, a sharp sell-off in riskier assets across the
board more than offset any hopes of Fed action for now, traders
said.
Spot gold was down 1.6 percent at $1,579 an ounce by
3:04 p.m. EDT (1904 GMT).
U.S. gold futures for August delivery settled down
$30.50 at $1,578.90 an ounce.
Silver fell 2.5 percent to $26.97 an ounce.
Bullion briefly turned higher after the report showed job
creation during the month was not enough to bring down the U.S.
unemployment rate at 8.2 percent, as it fueled concerns that
Europe's debt crisis was shifting the U.S. economy into low
gear.
"Certainly it brings up the picture of additional easing
discussion if the job number remains weakened, and that alone is
enough to buoy gold," said James Steel, chief metals analyst at
HSBC.
The payroll report has raised the chances in favor of the
Federal Reserve launching a new round of monetary stimulus to
boost growth, a Reuters poll of 15 Wall Street economists showed
a 65 percent chance the Fed will for the third time expand its
balance sheet via large-scale bond purchases.
Gold has been particularly sensitive to central banks'
monetary policies. In February, it was up 15 percent for the
year after the Fed said it would keep interest rates near zero
until late 2014.
On Friday, bullion is only up less than 2 percent.

PHYSICAL DEMAND SLOW
There was little support for gold from the physical market,
where bullion demand remained subdued after prices rose above
$1,600 earlier this week, with dealers in Asia said to be
waiting for a lower price level.

In another sign of weak physical demand, Hong Kong shipped
75,456 kg of gold to mainland China in May, down 26 percent from
the previous month, trade data showed.
In platinum group metals, platinum dropped 2.3
percent to $1,435.75 an ounce, and palladium eased 1.3
percent to $573.23.
3:04 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold AUG 1578.90 -30.50 -1.9 1576.40 1610.60 151,881
US Silver SEP 26.92 -0.752 -2.7 26.905 27.795 37,909
US Plat OCT 1449.50 -28.20 -1.9 1440.80 1479.30 5,903
US Pall SEP 580.35 -5.40 -0.9 574.35 589.00 2,782

Gold 1579.00 -25.33 -1.6 1577.10 1609.39
Silver 26.970 -0.690 -2.5 26.970 27.800
Platinum 1435.75 -33.43 -2.3 1443.75 1471.50
Palladium 573.23 -7.55 -1.3 577.00 585.75

TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 161,554 186,934 196,124 19.98 0.02
US Silver 43,302 60,082 58,222 30.74 -4.07
US Platinum 5,979 12,230 9,025 23 0.00
US Palladium 2,792 4,813 4,622

(Additional reporting by Maytaal Angel in London and Rujun Shen
in Singapore; editing by M.D. Golan and Marguerita Choy)