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PRECIOUS-Gold rebounds from two-month low ahead of U.S. jobs data

(Recasts; updates prices; adds comment, byline, NEW YORK
dateline)
    * SPDR Gold holdings register first monthly dip in four
months
    * Platinum, palladium hit multi-week lows

    By Marcy Nicholson and Clara Denina 
    NEW YORK/LONDON, Sept 1 (Reuters) - Gold turned higher after
tapping the lowest level in more than two months on Thursday, as
the dollar fell on unexpectedly weak U.S. manufacturing data
that raised doubts about the economy's strength.
    Other U.S. data showed initial claims for state unemployment
benefits rose less than expected last week, pointing to
sustained labor market strength. 
    Investors, however, are now focused on the release on Friday
of the U.S. nonfarm payrolls report for August to see whether it
will put the Federal Reserve on track to raise interest rates
later this year.
    Spot gold touched its lowest level since June 24 at
$1,301.91 an ounce, before rising 0.35 percent to $1,313.07 by
2:33 p.m. EDT (1833 GMT). U.S. gold futures settled up
0.4 percent at $1,317.10.
    "Generally speaking the U.S. economy seems to have improved
over the past few weeks and the interest rate expectations have
risen quite significantly," Commerzbank analyst Daniel
Briesemann said.
    "Gold could fall below $1,300, even if the market is pricing
in good jobs data tomorrow." 
    An upbeat payrolls report would reinforce the view that a
U.S. rate increase is likely before the end of the year after
Fed Chair Janet Yellen said last week that the case for higher
rates had strengthened. 
    Comments by other Fed officials, however, have been mixed. 
  
    Gold is highly sensitive to rising U.S. interest rates,
which increase the opportunity cost of holding the non-yielding
asset.
    "The market has found technical support in light of weakness
in the dollar," said Eli Tesfaye, senior market strategist for
brokerage RJO Futures in Chicago.
    The market was respecting technical support around the 38.2
percent Fibonacci retracement level at $1,316, from the July
high to May low, basis December, Tesfaye said.
    "Technicals show that gold and silver prices need some
correction and will see some mild rebound. But Friday's jobs
data is going to be crucial," said Jiang Shu, chief analyst at
Shandong Gold Group.
    "If the jobs data is going to be good, gold will fall to
$1,260-$1,270 levels as markets will hope for a rate hike in
September."
    Holdings of SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, posted the first monthly dip
in  four months in August. 
    In other precious metals trading, silver gained 1.2
percent to $18.84 an ounce, while platinum dropped to a
nine-week low of $1,035.15 an ounce. Palladium fell 2.2
percent to a six-week low of $654.72 an ounce.

    
 (Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by Dale Hudson and Paul Simao)
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