PRECIOUS-Gold near 6-week low, poised for third weekly loss
* Gold retains 1 pct overnight drop * Physical demand fails to provide support * Coming up: U.S. Non-farm payrolls July at 1230 GMT (Updates prices) By A. Ananthalakshmi SINGAPORE, Aug 1 (Reuters) - Gold held near a six-week low on Friday and was on track for a third straight weekly loss as U.S. economic optimism offset any safe-haven demand from geopolitical tensions. The optimism stemming from a string of strong U.S. data is likely to increase as the July nonfarm payrolls report scheduled for release later in the day is expected to show the world's top economy maintaining a solid pace of jobs growth. Spot gold edged up slightly to $1,283.90 an ounce by 0632 GMT, after falling 1 percent in the previous session. It hit $1,280.76 on Thursday - the lowest since June 19. Gold was on track for a 2 percent fall for the week, after posting its sharpest monthly drop of the year in July. The third consecutive weekly drop would be gold's longest such losing streak since September. "Tonight's key nonfarm payrolls will be the decisive factor for gold's next move," MKS Group said in a note. "The market is expecting an addition of 230,000 jobs, if it is well above this number gold is likely to continue to push lower, whilst the yellow metal should find a bid if it's less than 200,000." A strong economy blunts gold's appeal as an alternative to riskier assets such as equities. The precious metal's sharp losses on Thursday were triggered by data showing U.S. labour costs recorded their biggest gain in more than 5-1/2 years in the second quarter. Physical demand, however, failed to pick up in a robust way despite the price drop on Thursday, a dealer in Hong Kong said. U.S. gold coin sales dropped about 40 percent in July from a month ago. Chinese gold jewellery demand fell for the first time in eight years in the second quarter and could drop as much as 20 percent in the full year, a leading precious metals consultancy said. Spot gold is expected to slip to $1,271 as it has broken below a support at $1,284, Reuters technicals analyst Wang Tao said. Investors were also keeping an eye on geopolitical tensions in the Middle East and Ukraine. Israel and Islamist militant group Hamas agreed to a 72-hour ceasefire in their conflict in the Gaza Strip starting on Friday, while the European Union issued fresh sanctions against Russia over Moscow's support for rebels in Ukraine. PRICES AT 0632 GMT Metal Last Change Pct chg Spot gold 1283.9 1.81 0.14 Spot silver 20.39 0.04 0.2 Spot platinum 1461 6.6 0.45 Spot palladium 873 6.3 0.73 Comex gold 1283.6 2.3 0.18 Comex silver 20.43 0.018 0.09 Euro 1.3385 DXY 81.497 COMEX gold and silver contracts show the most active months (Editing by Himani Sarkar)
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