* Physical markets quiet; U.S. gold futures volume weak
* SPDR gold ETF sees 1.8 tonne outflow
* Palladium falls on forced liquidation, profit taking
* Coming up: US wholesale inventories, FOMC minutes Weds (Adds outside market activities, updates prices)
By Frank Tang and Clara Denina
NEW YORK/LONDON, April 7 (Reuters) - Gold fell in quiet trade on Monday, weighed down by lack of investment interest after Friday’s short-covering rally by bullion investors who had feared U.S. job gains would sharply exceed Wall Street’s expectations.
The yellow metal dropped as U.S. equities measured by the S&P 500 index tumbled for a second session and as Treasury yields were lower. Gold often rises with a weaker S&P and lower U.S. Treasury yields.
Investors took profits after gold gained more than 1 percent on Friday, its biggest one-day jump in three weeks. Nonfarm payrolls data Friday showed U.S. employers filled 192,000 jobs last month, slightly below economists’ estimate of 200,000.
Turnover was low on Monday, with trading volume at under 80,000 lots, about 60 percent below the 30-day average of 200,000 lots, preliminary Reuters data showed.
“Investors are not taking any interest in the precious metals right now, and gold and silver are definitely in tight trading ranges,” said Jonathan Jossen, a COMEX gold options floor trader.
Spot gold was down 0.4 percent to $1,297 an ounce by 2:36 p.m. EDT (1836 GMT).
U.S. gold futures for April delivery settled down $5.20 at $1,298.30 an ounce.
Investors had speculated that a strong jobs figure, following a recent string of positive economic data, could prompt a quicker tightening of U.S. monetary policy. Gold had endured heavy selling ahead of the data, hitting a seven-week low of $1,277.29 last Tuesday.
“In hindsight, the nonfarm payrolls were relatively disappointing, given that there was a month-on-month decline,” said Jonathan Butler, an analyst at Mitsubishi.
“Clearly, once gold got above $1,305 there was potential for some profit-taking, which is what we’ve seen today,” he added.
The state of the U.S. economy will continue to be the prime factor driving gold prices in the near term, while monetary policy by the U.S. Federal Reserve and the European Central Bank should impact prices in the longer run, analysts said.
The next market focus is the release on Wednesday of the minutes of the Fed’s FOMC meeting last month.
Investor sentiment remained muted, with holdings in the world’s largest gold-backed exchange-traded fund (ETF), SPDR Gold Trust, falling 1.80 tonnes to 809.18 tonnes.
In the physical markets, demand was subdued as markets in China, the top buyer, were closed for a holiday. Weak physical demand has weighed on gold prices recently due to discounted prices and weak imports by China over the last month.
In other precious metals trading, platinum fell 1.3 percent to $1,424.25 an ounce, and silver was down 0.1 percent to $19.87 an ounce.
Holdings of the world’s largest platinum-backed ETF, Johannesburg’s NewPlat ETF, breached 1 million ounces for the first time last week, data showed, as a strike in the South African platinum sector prompted new buying.
Palladium was down 2.7 percent at $765.20 an ounce, as Monday’s sell-off forced some speculators to close out their bullish bets after the metal’s recent rally, traders said.
2:36 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL US Gold JUN 1298.30 -5.20 -0.4 1295.80 1304.80 71,027 US Silver MAY 19.907 -0.039 -0.2 19.775 20.015 24,140 US Plat JUL 1427.80 -23.10 -1.6 1426.60 1450.70 8,185 US Pall JUN 767.65 -23.10 -2.9 761.25 791.75 6,779 Gold 1297.00 -5.12 -0.4 1295.80 1304.19 Silver 19.870 -0.020 -0.1 19.810 20.010 Platinum 1424.25 -19.25 -1.3 1427.50 1447.00 Palladium 765.20 -21.30 -2.7 763.00 788.72 TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 76,536 199,404 181,781 17.44 0.06 US Silver 32,563 47,185 58,246 21.6 -0.10 US Platinum 8,301 17,554 12,515 18.3 -0.18 US Palladium 6,894 5,971 5,807 28.7 0.29 (Additional reporting by Jan Harvey in London and A. Ananthalakshmi in Singapore; Editing by Keiron Henderson, Paul Simao and Tom Brown)