* Strong jobs report, dollar rise dampen gold's appeal
* SPDR gold ETF sees biggest ever quarterly outflow in Q1
* US Mint reports highest ever quarterly silver coin sales
(Rewrites, updates with comment, market activity, adds link
to graphic, changes dateline, previously LONDON)
By Frank Tang
NEW YORK, April 1 (Reuters) - Gold fell 1 percent on Friday
as an encouraging U.S. jobs report boosted the dollar, but euro
zone debt worries and political unrest in the Middle East
lifted bullion off its lows.
Positive nonfarm payrolls and manufacturing activity data
confirmed the U.S. economy was strengthening, but economists
said the data was not enough to push the Federal Reserve off
its ultra-easy monetary policy course, which has helped power
gold to record highs.
"The payroll report has reduced some of the uncertainty
over the economy, and of course the dollar has gained after the
report. These two things are negative for gold," said Peter
Buchanan, senior economist of CIBC World Markets.
Spot gold <XAU=> dropped 0.9 percent to $1,425.25 an ounce
by 12:11 p.m. EDT (1611 GMT), sharply off its low at $1,412.55
hit earlier in the session. U.S. gold futures for June delivery
<GCM1> fell 1 percent to $1,425.70.
Gold recorded a 10th consecutive quarter of gains in the
first three months of 2011, but the it was the smallest rise
since the financial crisis gripped markets in late 2008.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic of gold's quarterly performance:
http://r.reuters.com/cew78r
Graphic of US March nonfarm payrolls:
http://r.reuters.com/kab88r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Despite a rally in energy prices, stagnant growth in wages
does not bode well for gold's inflation-hedge appeal, Buchanan
said. The jobs report for March showed that average weekly
hourly rate has been flat since January.
Gold also suffered as the dollar broadly on solid U.S.
employment data. []
HAWKISH FED COMMENTS
Even as most economists agree the Fed will not tighten
monetary policies in the short term, recent hawkish comments by
top Fed officials are weighing on bullion investor sentiment.
Jeffrey Lacker, Richmond Fed president, said the U.S.
central bank could raise interest rates by the end of the year
to curb rising inflation. []
Analysts are weighing up the chances of the Fed reducing
its quantitative easing measures, as a precursor to an eventual
rise in interest rates. Gold tends to suffer when rates climb,
as the opportunity cost of holding non-yielding assets
increases.
Gold prices hit a record $1,447.40 an ounce last month as
unrest across the Middle East and North Africa, the reemergence
of euro zone sovereign debt issues and an earthquake and
tsunami in Japan prompted buying of the metal as a haven from
risk.
ECB RATE HIKES, DEBT WORRIES EYED
Nick Moore, head of commodity strategy at RBS, said gold
prices were likely to suffer further from expectations that the
European Central Bank will hike interest rates this month.
Renewed concerns over the financial health of smaller euro
zone economies such as Portugal and Ireland are still weighing
on the euro, meanwhile.
Investment products such as gold-backed exchange-traded
funds saw less interest, with the No. 1 New York's SPDR Gold
Trust <GLD> reported its biggest ever quarterly outflow in Q1.
U.S. Mint data showed more gold American Eagles were sold
in the first quarter than in any quarter since the end of 2009,
and sales of silver American Eagle coins were the highest ever
in the first quarter. []
Silver <XAG=> fell a penny to $37.59 an ounce.
Platinum group metals rose but gains were limited after
General Motors Co <GM.N> said U.S. sales in March came in below
expectations on Friday. []
Platinum <XPT=> inched up 0.1 percent to $1,767.99 an
ounce, while palladium <XPD=> climbed 1.3 percent to $768.47.
Prices at 12:11 p.m. EDT (1611 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCM1> 1425.70 -14.20 -1.0% 0.3%
US silver <SIK1> 37.625 -0.263 -0.7% 21.6%
US platinum <PLN1> 1774.70 -8.50 -0.5% -0.2%
US palladium <PAM1> 772.15 4.25 0.6% -3.9%
Gold <XAU=> 1424.25 -12.23 -0.9% 0.3%
Silver <XAG=> 37.59 -0.01 0.0% 21.8%
Platinum <XPT=> 1767.99 1.69 0.1% 0.0%
Palladium <XPD=> 768.47 10.12 1.3% -3.9%
Gold Fix <XAUFIX=> 1418.00 -16.50 -1.2% 0.5%
Silver Fix <XAGFIX=> 37.63 -24.00 -0.6% 22.9%
Platinum Fix <XPTFIX=> 1773.00 6.00 0.3% 2.4%
Palladium Fix <XPDFIX=> 772.00 4.00 0.5% -2.4%
(Additional reporting by Jan Harvey in London; Editing by Lisa
Shumaker)
