* Diminishing safe-haven demand, optimism weighs on gold
* U.S. jobs data shows highest unemployment since 1983
* Silver pressured by ETF records outflow
(Recasts, updates with quotes, closing prices, adds NEW
YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, April 3 (Reuters) - Gold dropped on Friday
as risk aversion receded after the previous session's stock
markets rally and as the tone of the global economy improved
after the G20 leaders' summit.
"At least for the moment, there seems to less demand for
flight to safety, but I don't know if this is going to be a
pattern that is going to continue," said Bill O'Neill, managing
partner of commodities firm LOGIC Advisors.
However, losses were limited as investors turned to gold as
Wall Street weakened after U.S. non-farm payrolls data showed
the country's unemployment rate soared to 8.5 percent, its
highest level since 1983. []
Spot gold <XAU=> was at $895.00 an ounce at 1:10 p.m. EDT
(1710 GMT), down 0.9 percent from its last quote $903.15 in New
York late Thursday.
U.S. gold futures for June delivery <GCM9> settled down
$11.60, or 1.3 percent, at $897.30 on the COMEX division of the
New York Mercantile Exchange.
"I think there are a number of things that have made people
conclude that things are not as bad as they were a month or two
ago," said Standard Chartered analyst Daniel Smith. "But I
think the optimism is a bit overdone."
"For the time being, gold is likely to remain under
pressure and other markets...will remain quite strong, but I
don't think that is supported by the underlying picture," he
said.
The stock markets' sharp rally in recent sessions had
deflected interest from gold, and the metal slipped as
investors sold bullion holdings to buy other assets.
"You have to keep a watch on the run in the global stock
market -- that could run well out of steam, and then I think
you will see some more interest coming to gold," O'Neill said.
SAFE HAVEN DEMAND FADES
On the foreign exchange markets, the dollar rose against
most currencies as the jobs data dulled hopes of a recovery and
boosted the U.S. currency's safe haven appeal. []
Gold is often bought as an alternative investment to the
dollar and typically moves in the opposite direction to it.
However, the relationship has been weakened in recent months as
both assets benefited from risk aversion.
Gold was also pressured by reports the G20 had discussed
the sale of 403 tonnes of gold held by the International
Monetary Fund, approved last year. []
Investment bank UBS said it expected the sale to be
conducted under the terms of the Central Bank Gold Agreement.
Signatories of the pact, which include the IMF and the European
Central Bank, are limited to sales of 500 tonnes of gold a
year.
"Due to the limited amount of time available before the
expiry of the second agreement (in September) and the
legislative hurdles that must be cleared, we believe this
almost guarantees that a third five-year CBGA will be
announced," UBS said.
Spot silver <XAG=> at $12.73 an ounce, down 1.2 percent
from its previous finish of $12.90.
The world's largest silver-backed exchange-traded fund, the
iShares Silver Trust <SLV>, said its holdings dipped from a
record on Thursday. ETFs, which back up the securities they
issue with physical commodities, are a major element of
demand.
Among other precious metals, spot platinum <XPT=> traded at
$1,155.50 an ounce, up 0.2 percent from its previous close of
$1,153.50, while spot palladium <XPD=> was at $219.00 an ounce,
down 0.9 percent from its previous finish of $221.
(Reporting by Frank Tang and Jan Harvey; With additional
reporting by Pratima Desai; Editing by Marguerita Choy)
