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Gold eases as dollar gains on strong economic data

BENGALURU (Reuters) - Gold slipped on Thursday as the dollar gained on positive economic data from China and the United States, but held above a key $1,300-an-ounce level as safe haven demand due to North Korean tensions capped losses.

FILE PHOTO: An employee of Deutsche Bundesbank tests a gold bar with an ultrasonic appliance during a news conference in Frankfurt January 16, 2013. REUTERS/Lisi Niesner/File Photo

Spot gold was down 0.4 percent at $1,303.11 per ounce at 0638 GMT, but was on track for a near 3 percent monthly gain.

U.S. gold futures for December delivery eased 0.4 percent to $1,308.50.

“Gold will be somewhat at the mercy of random month-end U.S. dollar flows today, with the technical picture still constructive as long as the $1,284.00 support holds,” said Jeffrey Halley, a senior market analyst at OANDA.

Investors discovered a taste for the dollar and commodities on Thursday as upbeat Chinese and U.S. economic news whetted appetite for riskier assets globally, even as tensions over North Korea simmered in the background.

The Commerce Department said its second estimate of U.S. gross domestic product showed that it increased at a 3.0 percent annual rate in the second quarter, its quickest pace in more than two years.

U.S. private-sector employers hired 237,000 workers in August for the biggest monthly increase in five months, a report by a payrolls processor showed.

The ADP National Employment Report figures come ahead of the U.S. Labor Department’s more comprehensive non-farm payrolls report on Friday.

Meanwhile, President Donald Trump declared “talking is not the answer” to the standoff with North Korea over its nuclear missile development, but his defense chief swiftly asserted that diplomatic options remain, and Russia demanded U.S. restraint.

“Barring a quick resolution to the current stalemate, gold could remain buoyed above $1,300/oz for some time,” OCBC Bank said in a note.

The bank revised up its year-end outlook for gold to $1,250 an ounce from $1,200 previously.

“Despite our revision, gold prices are expected to trend lower into the fourth quarter given our call for the U.S. Federal Reserve to hike its benchmark rate by another 25 basis points before the year is up.”

Spot gold may test a support at $1,295.97 per ounce, a break below which could cause a loss to the next support at $1,287, said Reuters technical analyst Wang Tao.

“Given that the rhetoric coming from Japan and the U.S. to date has been tempered, prices could drift lower,” said Cameron Alexander, an analyst with Thomson Reuters-owned metals consultancy GFMS.

Among other precious metals, silver slid 0.3 percent to $17.33 per ounce.

Platinum edged 0.4 percent lower to $982.49 per ounce. Palladium was up 0.5 percent to $932.03 an ounce.

Reporting by Arpan Varghese in Bengaluru; Editing by Amrutha Gayathri and Richard Pullin