* Gold surrenders gains on dollar drop, strong euro data
* Safe-haven appeal up as Ukraine inches closer to war
* Platinum strikes grind on in South Africa
* Coming up: U.S. productivity data on Wednesday
(Updates market activities)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, May 6 Gold prices eased on
Tuesday, surrendering early gains as weak physical demand made
investors wary about the outlook, though tensions in Ukraine and
weakness in the U.S. dollar and Wall Street stocks lent support.
Bullion initially rose as the dollar fell against the euro
following strong surveys of service-sector purchasing managers
in Spain and Italy.
The metal, however, turned lower after the Commerce
Department said U.S. trade deficit narrowed in March as exports
rebounded, but the improvement was probably not enough to
prevent the government from revising down its estimate of
first-quarter growth to show a contraction.
Gold prices were underpinned by worries of increasing
violence as Ukraine slides further towards war, with supporters
of Russia and of a united Ukraine accusing each other of tearing
the country apart.
"As long as we see geopolitical tensions, that's going to
provide support for gold. In other words, I don't see it falling
precipitously," said Mike Meyer, assistant vice president at
EverBank World markets in St. Louis.
Spot gold was down 0.2 percent at $1,307.51 an ounce
by 3:43 p.m. EDT (1943 GMT).
U.S. COMEX gold futures for June delivery settled
down 70 cents an ounce at $1,308.60, with trading volume about
10 percent below its 30-day average, preliminary Reuters data
The metal bounced back above the key chart level of $1,300
an ounce late last week as escalating tensions in Ukraine
outweighed the impact of strong U.S. jobs data, but it has
struggling to maintain those gains, however.
"Physical demand seems to be somewhat muted. We've seen
significant ETF outflows in the last couple of weeks and muted
coin sales in the United States," said Commerzbank analyst
Outflows from the world's largest gold-backed
exchange-traded fund, the SPDR Gold Trust, totalled nearly
10 tonnes last week.
Demand in Asia was soft overnight, precious metals house MKS
said in a note, with Japan, Hong Kong and South Korea all absent
for public holidays.
Among other precious metals, silver rose for a third session
after hitting its lowest since early January last week at $18.82
Silver inched down 0.1 percent to $19.52 an ounce.
Platinum group metals outperformed on supply worries, with
platinum rising 0.4 percent to $1,449.74 an ounce and
palladium up 0.1 percent at $814.75 an ounce.
The world's No. 2 platinum producer Impala Platinum
said on Tuesday that if a 15-week strike continued at its South
African operations, it would have to cut supply to clients to 40
percent of demand over the next 3 to 4 months.
South Africa's Association of Mineworkers and Construction
Union on Monday rejected the latest wage offer by the world's
three biggest platinum mining companies, who said the workers
were afraid to accept the companies' latest wage offer because
of "threats to their personal safety."
3:43 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold JUN 1308.60 -0.70 -0.1 1304.40 1314.30 98,340
US Silver MAY 19.598 0.078 0.4 19.475 19.605 33
US Plat JUL 1458.10 9.70 0.7 1447.10 1459.60 9,068
US Pall JUN 818.40 1.90 0.2 812.25 822.00 2,967
Gold 1307.51 -1.99 -0.2 1305.00 1314.10
Silver 19.520 -0.010 -0.1 19.500 19.690
Platinum 1449.74 5.49 0.4 1446.50 1456.00
Palladium 814.75 1.15 0.1 814.00 819.50
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 116,223 129,805 179,852 14.9 -0.52
US Silver 31,322 64,360 55,946 23.25 0.24
US Platinum 9,436 8,878 12,428 16.29 1.04
US Palladium 3,417 5,764 5,687 25.68 0.56
(Additional reporting by Jan Harvey in London; Editing by Susan
Thomas, Jane Baird and Marguerita Choy)