PRECIOUS-Gold dips from 9-week top as China sets yuan higher, stocks climb

* Gold climbs to fresh 9-week top but fails to hold
    * Chinese stocks up 2 pct
    * U.S. jobs data due later in day

 (Updates prices)
    By A. Ananthalakshmi
    SINGAPORE, Jan 8 (Reuters) - Gold gave up gains after
hitting a nine-week high above $1,100 an ounce on Friday, as
China guided the yuan higher for the first time in nine days,
supporting Asian equities.
    The People's Bank of China set the midpoint rate of the yuan
higher, after allowing the biggest fall in five months in the
previous session. That move, along with Beijing's deactivation
of a circuit breaker mechanism in the stock market, sent Chinese
shares up about 2 percent on Friday. 
    The CSI300 index has slid 10 percent in the first
week of 2016, despite the modest gains on Friday.
    Jitters over the Chinese economy spooked global stock
markets and sent investors sprinting to safe-haven assets this
week, sending gold prices sharply higher.    
    Spot gold had dropped 0.7 percent to $1,101.71 an
ounce by 0635 GMT, after climbing to $1,112 earlier in the
session, its highest since Nov. 4. U.S. gold futures 
also fell from a nine-week high. 
    "For now, the only way to trade gold is to take a view on
the equity markets and on the Chinese market in particular, as
it seems to be the driving force that is pushing the rest of the
space lower," said INTL FCStone analyst Edward Meir. 
    Gold is often seen as a hedge against geopolitical and
financial uncertainty, along with other haven assets such as the
Japanese yen and U.S. Treasuries. Safe-have rallies, however,
tend to be short lived. 
    Riding on the back of earlier gains, gold was set to post
its best week since August with 4 percent gains. 
    Asian shares ticked higher on Friday, taking cues from the
Chinese markets, but were set to post their worst week in four
    "The widespread tumult in the world markets leaves investors
with reduced near-term options and some are opting for gold, at
least until the financial markets stabilise. The gold rally can
continue until investor confidence is restored," said HSBC.
    Assets of SPDR Gold Trust, the top gold-backed
exchange-traded fund, rose 0.65 percent to 645.13 tonnes on
Thursday, the first increase in three weeks. 
    With the U.S. non-farm payrolls report due later on Friday,
the focus later in the session could turn to the U.S. economy. 
    A strong report could prompt the Federal Reserve to raise
U.S. rates at a faster pace. Higher rates could dent demand for
non-interest-paying gold while boosting the dollar.   
    PRICES AT 0635 GMT    
 Metal             Last     Change   Pct chg
 Spot gold         1101.71    -7.39    -0.67
 Spot silver        14.185   -0.115     -0.8
 Spot platinum       876.4      2.6      0.3
 Spot palladium      498.4     6.15     1.25
 Comex gold         1101.8       -6    -0.54
 Comex silver        14.18   -0.164    -1.14
 COMEX gold and silver contracts show the
 most active months
 (Reporting by A. Ananthalakshmi; Editing by Joseph Radford and
Anand Basu)