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PRECIOUS-Gold slides on U.S. payrolls before recovering

* U.S. payrolls data beats forecasts, boosts dollar
    * Gold bounces from lows as investors hunt bargains
    * Gold on track for 6th straight week higher
    * GRAPHIC-2016 asset returns: reut.rs/1WAiOSC

 (Updates prices; adds comment, second byline, NEW YORK
dateline)
    By Marcy Nicholson and Jan Harvey
    NEW YORK/LONDON, July 8 (Reuters) - Gold slipped sharply on
Friday after stronger than expected U.S. payrolls data for June
but rebounded quickly, underpinned by concerns over the outlook
for financial markets following Britain's Brexit vote.
    Gold hit a low of $1,335.66 an ounce in the wake of data
showing that U.S. non-farm payrolls increased by 287,000 jobs
last month, the largest gain since October. That sent the dollar
to a two-week high against the euro and reignited talk that the
U.S. Federal Reserve could lift interest rates this year.
    Spot gold, which has risen more than $100 an ounce
since Britain voted to quit the EU, was down 0.1 percent at
$1,358.87 an ounce by 2:27 p.m. EDT (1827 GMT). It was on track
to close higher for the sixth straight week.
    U.S. gold futures for August delivery, which fell as
low as $1,336.30 an ounce in the wake of the jobs data, settled
down 0.3 percent at $1,358.40. 
    "The knee-jerk reaction to the stronger than expected
payrolls data has been lower, but you're already seeing gold
bounce off the lows," UBS analyst Joni Teves said.
    "There are still a lot of people out there who want to build
gold positions, and will be keen to come in on any
retracements."
    Traders had awaited the payrolls data for clues on U.S.
monetary policy. Fed futures contracts, which suggested before
the jobs report that traders saw only a 19 percent chance of a
U.S. rate hike by December, now suggest a higher chance.
 
    Lower rates tend to boost gold prices because they cut the
opportunity cost of holding non-yielding bullion while weighing
on the dollar, in which it is priced. 
    "It's a great indicator that the market is still affected by
the Fed having to keep interest rates low despite the jobs
report, and concerns are exacerbated by Brexit," said Anthem
Blanchard, chief executive of Anthem Vault, noting the quick
recovery after an early drop.
    SPDR Gold Trust, the world's largest gold-backed
exchange-traded fund, said its holdings fell by a little more
than four tonnes on Thursday to 978.29 tonnes, having posted its
biggest daily inflow in six years on Tuesday. 
    In India, gold discounts soared to a record high of up to
$100 an ounce this week as prices in the world's second-largest
bullion consumer hit their highest in nearly three years.
 
    Silver was up 2.2 percent at $20.09 an ounce,
platinum rose 1 percent at $1,097 and palladium 
was up 1 percent at $614.30.

    
 (Additional reporting by Nallur Sethuraman and Vijaykumar
Vedala in Bengaluru; Editing by David Goodman and Chizu
Nomiyama)
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