* Dollar steadies as improvement in U.S. jobs data expected
* SPDR sees outflow of 2.10 tonnes on Monday
* China prices at premium for 1st time since early March
(Updates prices, adds comment)
By Clara Denina
LONDON, April 2 Gold rose around one percent on
Wednesday, recouping some strength after two days of losses as
investors remained jittery ahead of U.S. jobs data that should
help gauge the strength of the world's biggest economy.
Spot gold rose 1 percent to $1,291.80 an ounce by
1331 GMT. It hit its lowest since Feb. 11 at $1,277.29 in the
Gold futures for April delivery rose $12.40 to
$1,292.40 an ounce.
"At the moment we are seeing some short-covering from those
who had been waiting for a deeper correction but that shouldn't
take away from the fact that the main event remains the NFPs
(non-farm payrolls) on Friday," Saxo Bank senior manager Ole
After encouraging manufacturing and car sales data on
Tuesday, ADP jobs figures showed the pace of hiring picked up in
March, although the number of workers added by the U.S. private
sector was slightly below the 195,000 forecast.
As U.S. data turn more positive after two months of
underperformance due to extremely cold weather, market
participants await Friday's payrolls data, which will be
preceded by weekly jobless claims on Thursday.
The negative impact of any strong U.S. data on gold could,
however, be cushioned by Federal Reserve chair Janet Yellen's
recent defence of the Fed's easy monetary policy, analysts said.
"There will be a greater search for meaningful clues from
the Fed as to whether a genuinely hawkish stance is being taken
as suggested a couple of weeks ago or not," Mitsubishi analyst
Jonathan Butler said.
In wider markets, the dollar was up 0.1 percent against a
basket of currencies, drawing support from steadier U.S.
Returns from U.S. bonds are closely watched by the gold
market, given that the metal pays no interest.
As a gauge of investor interest, holdings in SPDR Gold Trust
, the world's largest gold-backed exchange-traded fund,
fell 2.10 tonnes to 810.98 tonnes on Tuesday - the lowest since
Physical demand from top consumer China rose slightly, with
local prices trading at a premium to spot London prices for the
first time since early March.
Prices for 99.99 percent purity gold on the
Shanghai Gold Exchange hit a premium of about $1 an ounce to
spot prices before easing to trade on par with London rates.
Since early March, Shanghai prices have been at a discount
due to weak demand. Traders said discounts had gone up to $8-$10
Prices were at a premium of over $20 an ounce in January
just before the Chinese New Year holiday.
"Physical demand remains lacklustre across a host of regions
and this is an important signal - gold needs that physical
indicator to pick up in order to give the market some confidence
that a floor is nearby," UBS said in a note.
Platinum rose 1 percent to $1,431.25 an ounce and
palladium gained 1.2 percent to $783.25 an ounce on
continued worries over supply constraints and positive U.S. car
Anglo American Platinum has sent force majeure
notices to some of the suppliers to its South African mines, the
world's top platinum producer said, underscoring the widening
economic impact of an almost 10-week-old strike.
Silver rose 1.5 percent to $19.99 an ounce.
(Additional reporting by A. Ananthalakshmi; editing by William
Hardy and Keiron Henderson)