PRECIOUS-Gold eases as investors expect U.S. payrolls spike

                                
 * Anticipated spike in U.S. jobs hits gold safety trade
                                
 * Risk aversion also lessened as euro zone fear abates
                                
 * Physical demand limits gold losses
                                
 * Coming up: U.S. May non-farm payrolls data on Friday
 (Recasts, updates prices, comment, changes dateline previous
LONDON)
                                
 By Carole Vaporean
                                
 NEW YORK, June 3 (Reuters) - Gold fell for a second day on
Thursday, hit by selling among investors who were looking for a
possible surge in Friday's U.S. payrolls data to follow several
reports indicating that employers have been adding jobs,
curbing the need for safe-haven assets like gold.
                                
 Improved job market readings add to other healthy economic
reports out this week, that inspired some investors to take
profits on gold as the need for a safe haven asset seemed to be
lessening, at least in the United States.
                                
 Spot gold <XAU=> slid to $1,205.05 an ounce by 3:30 p.m.
EDT (1930 GMT), from $1,224.30 an ounce late in New York on
Wednesday, well off this week's peak of $1,230.60 an ounce.
                                
 Benchmark U.S. gold futures for August delivery <GCQ0> on
the COMEX division of the New York Mercantile Exchange closed
$12.60, or 1.03 percent, lower at $1,210.0 an ounce, and
continued slipping in after-hours trade.
                                
 "U.S. economic reports here have been good, the stock
market looks like it's bottoming, risk aversion is coming off a
little bit, and people want to go into a little riskier
assets," said Donald Selkin, chief market strategist at
National Securities Corp in New York.
                                
 For example, new orders received by U.S. factories rose 1.2
percent in April, U.S. Commerce Department data and followed
March's surprisingly robust gain. [ID:nN02190143]
                                
 In the labor market, other reports showed U.S. private
sector employers added jobs in May and the economy's dominant
services sector increased payrolls for the first time in more
than two years, building evidence that the labor market was
picking up steam. [ID:nN0360959]
                                
 "Here, in the U.S., you've had one good report after
another. Factory orders were very good, plus the ISM employment
component gained. So, that gives optimism for tomorrow's
report," said Selkin, referring to release of the May U.S.
labor report.
                                
 In response, Friday's nonfarm payrolls report could show
"quite a large number" of jobs added in May, helped by a likely
spike in the hiring of census workers, Macroeconomic Advisers
LLC chairman Joel Prakken said on Thursday. [ID:nN03230980]
                                
 Analysts' average forecast for U.S. payrolls growth are
expected to show 513,000 jobs were added in May. This could
potentially boost the dollar and further undermine bullion's
safe-haven appeal. [ID:nN01175887]
                                
 If true, investors could continue unwinding so-called safe
haven trades, taking profits off of its recent advance to put
the cash to work in other markets, like equities.
                                
 Fears of a spreading euro-zone debt crisis also abated,
adding to participants desire to ease their safe-haven
investments. Euro zone debt worries 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-ladened euro zone member states to take hold, keeping an
underpinning under the gold market.
                                
 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. [GOL/SPDR]
                                
 In India, the world's top physical gold market, some
jewelers 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. [ID:nSGE6520AO]
(Graphic: http://link.reuters.com/wyz97k)
                                
 Silver fell faster than gold, because it was getting sold
as both a financial and industrial asset.
                                
 "The precious component is under a little bit of pressure
and the industrial component is getting clobbered, along with
copper, on all those fears about China," said Sterling Smith,
an analyst for Country Hedging Inc. in St. Paul, Minnesota.
                                
 Spot silver <XAG=> dipped to $18.14 an ounce, down from
late Wednesday $18.31.
                                
 "If risk appetite returns to financial markets in coming
months, and we see a waning of investor appetite for 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 down from
late Wednesday's quote at $1,545, and palladium <XPD=> slipped
to $449.50 from $454.50 late on Wednesday.
 (Additional reporting by Barani Krishnan in New York, Amanda
Cooper, Humeyra Pamuk and Jan Harvey in London and Lewa
Pardomuan in Singapore; Editing by Marguerita Choy)