* Risk aversion abates on robust Europe, U.S. data
* Physical demand limits gold losses
* Coming up: U.S. non-farm payrolls data on Friday
(Updates throughout with prices, comment)
By Amanda Cooper
LONDON, June 3 (Reuters) - Gold fell for a second day in
Europe on Thursday, dented by a reemergence of risk appetite
after data from the United States and Europe, although evidence
of brisk physical demand helped contain the decline in price.
Strong U.S. service sector data on Thursday, along with a
decline in weekly jobless claims helped dampen some of the
wariness that has plagued the investment community, driving down
volatility and pushing up equities.
Spot gold <XAU=> was at $1,217.10 an ounce by 1517 GMT, down
from $1,224.30 an ounce late in New York on Wednesday and below
this week's peak of around $1,230 an ounce.
Fear that the euro zone debt crisis could undermine the
tentative economic recovery in the region was a key driver
behind gold's rally to a record $1,248.95 an ounce in mid-May.
While some of that concern has been mitigated, it could take
months for some of the austerity measures in the more debt-laded
euro zone member states to take hold and this should continue to
support the gold market.
"The issue about the euro zone and its financial troubles
will be an underlying issue for a good few months to come ...
and it's these macroeconomic factors that have driven gold for
the past two years and I don't see why they should stop being
factors," said Virtual Metals analyst Matthew Turner.
Investors have embraced gold as an alternative to stocks,
bonds and even some currencies. The world's largest gold-backed
exchange-traded fund, SPDR Gold Trust <GLD.P>, said its holdings
hit a fresh record as of Wednesday, while the U.S. Mint said on
Wednesday it sold its largest number of gold coins in May since
January 1999. []
"People talk about gold as a safe haven and of investors
rushing into gold. If you look at the money spent, there can't
be that much investment compared to the stocks or the bond
markets, so coin demand is illustrative of investment, not just
by hedge funds but that it is becoming more widespread," Turner
said.
PAYROLLS AHEAD
Investors are awaiting key U.S. payrolls data on Friday,
which is expected to show 513,000 jobs were added to the economy
in May. This could potentially boost the dollar and further
undermine bullion's safe-haven appeal. []
Weekly jobless claims data released Thursday showed the
number of U.S. workers filing new claims for jobless benefits
fell last week, while private employers added jobs in May,
further evidence the labour market was improving. []
U.S. gold futures for August delivery <GCQ0> eased $4.10 an
ounce to $1,218.40. []
Underlying interest in gold is also intact, said Credit
Agricole analyst Robin Bhar. "The retail appetite is definitely
there... Maybe more dip demand as prices come back."
SPDR Gold Trust said its holdings rose to a record at
1,268.539 tonnes as of June 2 from 1,268.234 tonnes in the
previous business day. []
In India, the world's top physical gold market, some
jewellers stocked up as bullion prices dropped from a two-week
high, while selling from other consumers in Asia also slowed,
keeping premiums for gold bars steady. []
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For a graphic showing the gold technical outlook:
http://graphics.thomsonreuters.com/gfx/WT_20100306090842.jpg
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Silver <XAG=> was at $18.11 an ounce versus $18.45 an ounce.
"If risk appetite returns to financial markets in the coming
months and we see a waning of investor appetite for the precious
metals, we believe that silver will be more vulnerable to a
price correction than gold," analysts at RBS said in a note.
Spot platinum <XPT=> was at $1,545.50 an ounce versus
Wednesday's $1,545 an ounce while spot palladium <XPD=> was at
$450.98 an ounce versus $454.50.
(Additional reporting by Humeyra Pamuk and Jan Harvey in London
and Lewa Pardomuan in Singapore, Editing by Keiron Henderson)
