PRECIOUS-Gold clings above $1,700/oz as markets brace for U.S. jobs test

    * U.S. non-farm payrolls data due at 1230 GMT 
    * Solid jobs data could further pressure gold - analyst
    * Asia Gold-China premiums climb to near six-year peak 

 (Updates prices)
    By Arundhati Sarkar
    Sept 2 (Reuters) - Gold rose above the important
psychological level of $1,700 on Friday as the dollar paused
while investors awaited key U.S. jobs data, amid expectations
the Federal Reserve would continue with steep interest rate
hikes in coming months.
    Spot gold        rose 0.6% to $1,705.69 per ounce by 1206
GMT. The metal was down 1.8% for the week so far, having touched
a six-week low of $1,687.60 on Thursday.
    U.S. gold futures        were up 0.4% to $1,715.50.
    "The dollar is somewhat lower this morning which is helping
gold regain lost ground after yesterday's decline. There might
also be some bargain hunting in the market after prices dropped
to $1,700," said Carsten Menke, an analyst with Julius Baer. 
    Sentiment in the gold market overall has turned bearish and
prices could easily drop back below $1,700 should the labour
market report be better than expected as this would prompt
further dollar-driven and sentiment-driven selling, Menke added.
    The dollar index        dipped 0.3% but was not far from a
20-year peak.       
    After a host of recent U.S. economic data confirmed that its
economy was not headed into recession, investors now wait for
the nonfarm payrolls report for August at 1230 GMT.
    "Gold doesn't have much space for a rebound as markets are
pricing in a big increase in interest rates," said Carlo Alberto
De Casa, external analyst for Kinesis Money. "Investors want to
understand how hawkish the Fed can be and a solid jobs data will
heap more pressure on the central bank to raise rates, which is
negative for gold."             
    Higher interest rates increase the opportunity cost of
holding the non-yielding bullion.
    In physical markets, gold premiums jumped in top consumer
China, while a drop in local prices boosted demand in India.
    Elsewhere, spot silver        rose 0.5% to $17.9329 per
ounce, platinum        gained 0.9% to $835.59, and palladium
       added 0.8% to $2,027.96.

 (Reporting by Arundhati Sarkar in Bengaluru; Editing by Tomasz
Janowski, Louise Heavens and Mike Harrison)