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PRECIOUS-Gold set for biggest one-day jump in 7 weeks after U.S. payrolls data

* U.S. non-farm payrolls data misses expectations
    * Gold up 2 pct this week after four weekly losses
    * Silver, platinum, palladium prices all rally
    * GRAPHIC-2016 asset returns: reut.rs/1WAiOSC

 (Updates trading; adds comment, second byline, NEW YORK
dateline)
    By Marcy Nicholson and Jan Harvey
    NEW YORK/LONDON, June 3 (Reuters) - Gold surged more than 2
percent and was on track for its biggest one-day jump in seven
weeks on Friday after U.S. payrolls data fell well short of
forecasts, boosting expectations that the Federal Reserve will
stand pat on interest rates.
    The U.S. economy created the fewest jobs in more than five
years in May, a Labor Department report showed.
  
    That could make it difficult for the Fed to raise interest
rates further. The data sparked a rebound in gold, which had
slid to a 3-1/2 month low of $1,199.60 on Monday on growing
expectations for a hike. 
    Spot gold was up 2.5 percent at $1,240.70 an ounce at
2:19 p.m. EDT (1819 GMT), while U.S. gold futures for
August delivery settled up 2.5 percent at $1,242.90 an ounce. 
    "The climate for gold to go higher ... was certainly set
because this pretty sharp drop in bond yields, along with the
pull-back in the U.S. dollar and declining equities created a
good combination for the gold market to go higher," said James
Steel, chief metals analyst for HSBC Securities in New York.
    U.S. and European shares, the dollar, oil and bond yields
dived after the U.S. job data.  
    "The sharp drop in non-farm payrolls is negative for the
dollar and positive for gold," ABN Amro analyst Georgette Boele
said. "Expectations for a rate hike soon have clearly diminished
... Precious metals prices will fly higher."
    Gold was on track to rise 2.3 percent this week, following
four straight weeks lower after comments from senior U.S.
central bank officials, including Fed Chair Janet Yellen,
boosted expectations of an imminent rate rise. 
    Gold is highly sensitive to U.S. rate expectations, as
rising rates lift the opportunity cost of holding non-yielding
bullion, while boosting the dollar, in which it is priced.
    Gold demand in Asia, home to the world's biggest consumers
of physical gold, was muted this week as a slight increase in
India and Japan was offset by reductions in other trading
centers as buyers awaited further price declines.  
    Among other precious metals, platinum was up 2.7
percent at $977.76 an ounce after touching its lowest since
April 8 at $950 an ounce. It was on track for its first firm
week in four.
    Silver was up 2.4 percent at $16.35 an ounce, while
palladium was up 2.9 percent at $548.03 an ounce. Both
were on track for their first strong weekly performances in
five.

    
 (Additional reporting by Koustav Samanta and Vijaykumar Vedala
in Bengaluru; Editing by Bernadette Baum)
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