* Gold's retreat seen temporary
* Coming up: U.S. ISM N-Mfg PMI, Dec; 1500 GMT
(Updates with comment, adds ADP report, refreshes prices)
By Amanda Cooper
LONDON, Jan 5 (Reuters) - Gold pared gains and fell on
Wednesday, caught in its biggest three-day slide since
mid-November, after surprisingly strong U.S. jobs data buoyed
the dollar and encouraged investors to buy into riskier assets.
A report showing private sector employers added nearly three
times as many workers to payrolls in December than expected
boosted the dollar, helped stocks pare losses and undermined
perceived safe-havens like gold and Treasuries. []
Spot gold <XAU=> was last down 0.3 percent at $1,373.60 an
ounce at 1409 GMT, having fallen by as much as 0.5 percent to
session lows at $1,372.70, a day after having posted its largest
one-day loss since mid-November. U.S. February gold futures
<GCG1> fell 0.2 percent to $1,376.20.
Although gold is on track for its biggest three-day decline
in nearly two months, analysts said the price was still set for
further gains and could be prone to set-backs.
"I don't think this marks a turnaround from what has been
and continues to be bullish sentiment towards gold and hard
assets in general," said Credit Agricole analyst Robin Bhar.
"The ADP numbers and the recent raft of economic numbers are
good to see, but it's not a one-way bet that this market is in a
solid economic uptrend, there's still a lot of banana skins
along the way," he said.
U.S. private employers added 297,000 jobs in December, the
biggest increase since at least 2001, compared with a revised
gain of 92,000 in November, a report from ADP Employer Services
showed on Wednesday, beating forecasts for a rise of 100,000.
HOPEFUL FOR PAYROLLS
With the report coming two days ahead of the nationwide
government report on non-farm payrolls, forecast to show a rise
in December, investors boosted the dollar to session highs
against the euro and stripped a full point off the 30-year bond
<US30YT=RR>.
"As we saw yesterday, there can be significant set-backs,
that investors are taking profits and the big risk for gold,
from my perspective, are some of the major hedge funds, which
are long in physical gold or ETFs, start to take profits," said
Peter Fertig, a consultant for Quantitative Commodity Research.
Reflecting waning investor appetite for gold, holdings of
bullion in the world's largest gold-backed exchange traded fund,
the SPDR Gold Trust <GLD>, declined for a sixth consecutive time
to hit a seven-month low, reversing most of the inflows that
materialised when the euro zone debt crisis unfolded.
Silver <XAG=> fell for a third consecutive session, under
pressure from the strength in the dollar and a decline in other
growth-linked assets such as base metals.
Silver, which can mimic gold's performance when investors
feel nervous over the broader financial markets, is largely an
industrial commodity that can take its cue from higher-risk
assets such as stocks and base metals.
Also adding to the pressure on silver was the third daily
rise in the gold/siver ratio, which measures the number of
ounces of silver needed to buy one ounce of gold. The ratio fell
by a third to multi-year lows in 2010 as silver outperformed
gold with an 84-percent price rise.
Spot silver <XAG=> was last down by 1.8 percent at $29.24 an
ounce.
Weaker equity markets also undermined the platinum group
metals, which through their exposure to the auto market, tend to
react in tandem with other cyclical assets.
Spot platinum <XPT=> fell to a one-week low at $1,708.75
before recovering to $1,714.50, still down 2.2 percent on the
day, while palladium <XPD=> fell by 2.8 percent to $753.72.
(Editing by William Hardy)
