* US nonfarm payrolls rise 288,000 in June
* Unemployment rate falls to 6.1 pct
* Palladium hits fresh 13-year high
(Adds analyst comment, double byline, updates market activity)
By Frank Tang and Clara Denina
NEW YORK/LONDON, July 3 Gold slipped on Thursday
after U.S. nonfarm payrolls rose more than expected in June,
fueling expectations U.S. interest rates could rise earlier than
U.S. employment growth jumped in June and the jobless rate
closed in on a six-year low, compelling evidence the economy was
growing briskly heading into the second half of the year.
Nonfarm payrolls increased by 288,000 jobs and the
unemployment rate declined to 6.1 percent, the Labor Department
said on Thursday.
"It is interesting that we are well into the territory now
that one would expect a normalization of monetary policy," said
Mitsubishi Corp analyst Jonathan Butler. "There is still
downside risk there on gold," he added.
Fed policymakers have in the past promised to keep rates
near zero until U.S. unemployment falls below 5.5 percent, as
long as inflation and financial stability risks are contained.
Spot gold was down 0.6 percent to $1,319.15 an ounce
by 2:04 PM EDT (1404 GMT), having earlier dropped as much as 1.3
percent to a one-week low of $1,309.64.
U.S. COMEX gold futures for August delivery settled
down $10.30 at $1,320.60 an ounce, with trading volume about 30
percent above its 30-day average, preliminary Reuters data
Some analysts argue that gold can rise in tandem with higher
"If interest rates start rising, it's because the Fed is
worried about inflation, and that inflation factor can drive
gold prices up even as interest rates rise," said Jeffrey
Christian, managing director at CPM Group.
A low interest-rate environment has been key to higher gold
prices since the 2008 credit crisis, however, as investors were
more willing to put their money in noninterest-bearing assets.
Traders said gold could also receive a boost in the longer
run after European Central Bank President Mario Draghi said a
raft of policy measures introduced last month will help lift
inflation and support bank lending.
Among other metals, palladium was up 0.4 percent at
$855.60 an ounce.
Palladium, mostly employed in gasoline autocatalysts,
predominantly used in the United States and China, rose to its
highest level since February 2001 at $864.45 an ounce, as good
U.S. data lifted prospects for stronger auto demand.
Platinum was down 0.5 percent at $1,494.25 an ounce,
hovering near a 10-month high of $1,517.50 reached on Wednesday,
while silver ended unchanged at $21.09 an ounce.
2:04 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold AUG 1320.60 -10.30 -0.8 1309.40 1329.00 139,120
US Silver SEP 21.137 -0.165 -0.8 20.820 21.230 38,995
US Plat OCT 1507.70 -3.80 -0.3 1494.50 1511.30 10,448
US Pall SEP 861.90 4.50 0.5 849.10 867.45 5,540
Gold 1319.15 -7.99 -0.6 1309.64 1327.39
Silver 21.090 0.000 0.0 20.850 21.160
Platinum 1494.25 -7.25 -0.5 1492.90 1506.25
Palladium 855.60 3.40 0.4 849.50 864.45
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 155,048 120,472 164,401 13.08 -0.77
US Silver 40,949 70,978 54,619 19.41 -0.57
US Platinum 10,630 17,767 12,178 17.04 0.51
US Palladium 6,210 5,083 5,833 19.3 -0.80
(Additional reporting by A. Ananthalakshmi in Singapore;
Editing by William Hardy and Tom Brown)