* 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
* Coming up: ISM non-manufacturing index Tuesday
(Rewrites, updates comment, market activity, adds details)
By Frank Tang
NEW YORK, April 1 (Reuters) - Gold fell 0.5 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 speeded
economic recovery and helped power gold to record highs.
"As economic conditions appear to be improving, evidenced
by today's data, gold suffers as a store of value in times of
fiscal or financial uncertainties," said Mark Luschini, chief
investment strategist of broker-dealer Janney Montgomery Scott
with $53 billion assets under management.
Spot gold <XAU=> dropped 0.6 percent to $1,428.40 an ounce
by 1:40 p.m. EDT (1740 GMT), sharply off its low at $1,412.55
hit earlier in the session.
Bullion rose about 0.5 percent this week for its second
consecutive weekly gain. It hit a record $1,447.40 an ounce
last week.
U.S. gold futures for June delivery <GCM1> fell 0.7 percent
to $1,429.90.
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
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
"Just because we had a good payrolls number today, that
doesn't mean that one data point makes things all well and
good," said Luschini.
Luschini said that political unrest in the Middle East and
euro zone sovereign debt issues underpinned gold, and
end-of-quarter fund allocation also boosted the metal earlier
this week before the trade unwounded on Friday.
A successful Portuguese debt sale on Friday did little to
cull expectations it will soon join the euro zone bailout list,
while Ireland's credit rating was cut after bank stress tests
revealed another black hole. []
Despite a rally in energy prices, stagnant growth in wages
does not bode well for gold's inflation-hedge appeal, said
Peter Buchanan, senior economist of CIBC World Markets. The
U.S. jobs report for March showed that average weekly hourly
rate has been flat since January.
Gold was also pressured as the dollar broadly on solid U.S.
employment data. []
HAWKISH FED COMMENTS, ECB IN FOCUS
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. []
Gold tends to suffer when rates climb, as the opportunity
cost of holding non-yielding assets increases.
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.
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 gold American Eagles sales were the
strongest in the first quarter since the end of 2009, and
quarterly sales of silver American Eagle coins also rose to a
record in the same period. []
Silver <XAG=> gained 0.3 percent to $37.72 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 less than $1 to $1,766.99 an
ounce, while palladium <XPD=> climbed 1.7 percent to $771.22.
Prices at 1:40 p.m. EDT (1740 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCM1> 1429.90 -10.00 -0.7% 0.6%
US silver <SIK1> 37.755 -0.133 -0.4% 22.0%
US platinum <PLN1> 1774.00 -9.20 -0.5% -0.2%
US palladium <PAM1> 774.10 6.20 0.8% -3.6%
Gold <XAU=> 1428.40 -8.08 -0.6% 0.6%
Silver <XAG=> 37.72 0.12 0.3% 22.2%
Platinum <XPT=> 1766.99 0.69 0.0% 0.0%
Palladium <XPD=> 771.22 12.87 1.7% -3.5%
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)
