* Dollar falls against yen, euro
* Platinum hits highest since June 6
(Updates prices; adds comment, second byline, NEW YORK
dateline)
By Marcy Nicholson and Maytaal Angel
NEW YORK/LONDON, Aug 3 (Reuters) - Gold steadied on
Thursday, hovering below Tuesday's seven-week high, as investors
awaited U.S. jobs data for further clues on the outlook for
interest rates.
Gold rallied through most of July as the dollar fell on
reduced expectations for a third U.S. rate increase this year.
Inflation has been contained even though the labor market
appears to be in its best shape in many years and despite
double-digit U.S. earnings growth in the second quarter.
Reduced rate rise expectations tend to weaken the dollar,
making dollar-priced gold cheaper for non-U.S. investors.
The dollar fell against the yen, euro and Swiss franc, after
weaker-than-expected U.S. services sector data worried investors
and stoked doubts that the Federal Reserve would raise interest
rates again in 2017.
Spot gold was 0.15 percent higher at $1,268.15 an
ounce by 2:02 p.m. EDT (1802 GMT), not far from Tuesday's
seven-week high of $1,273.97. In early Asian trade, it fell
$6.20 within one minute to the session low of $1,258.20 but
quickly recovered.
"The dollar is weak so there's a little bit of spillover
effect from that," said Eli Tesfaye, senior market strategist
for brokerage RJO Futures in Chicago, referring to a source of
support for gold prices.
"There's position squaring ahead of the jobs data. Nobody
wants to get caught with any surprises."
The data is scheduled for release on Friday.
U.S. gold futures for December delivery settled down
0.3 percent at $1,274.40.
"We're still in a $1,200-$1,300 range and there doesn't seem
enough of anything material to worry investors sufficiently to
break us through that upper level," ICBC Standard Bank analyst
Tom Kendall said.
"On the downside it's been very similar, on recent occasions
where (gold has) got close to $1,200 its been well supported
through a combination of physical demand and defensive buying
from macro investors."
Futures markets now only see a 35 percent chance of another
rate rise by the end of 2017.
Global demand for gold fell 14 percent in the first half of
the year due mainly to a sharp decline in purchases by exchange
traded funds, the World Gold Council said.
Among other precious metals, platinum rose 1.8
percent to $958.95 per ounce after surging above its 200-day
moving average to its highest since June 7 at $964.20.
Silver rose 0.6 percent to $16.64 per ounce, while
palladium was 0.9 percent lower at $886.75 per ounce, on
track to break a streak of nine-sessions of gains.
(Additional reporting by Nithin Prasad and Arpan Varghese in
Bengaluru; editing by David Clarke and David Evans)