* Strong jobs report, dollar rise dampen gold's appeal
* SPDR gold ETF logs biggest-ever quarterly outflow in Q1
* U.S. Mint reports highest quarterly silver coin sales
* Coming up: ISM non-manufacturing index on Tuesday
(Updates prices to market close)
By Frank Tang
NEW YORK, April 1 (Reuters) - Gold slipped on Friday as an
encouraging U.S. jobs report boosted the dollar, though euro
zone debt worries and unrest in the Middle East lifted bullion
off lows.
Positive nonfarm payrolls and manufacturing data confirmed
a strengthening U.S. economy, but economists said the news was
not enough to push the Federal Reserve away from an ultra-easy
monetary stance that has helped gold hit 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 at broker-dealer Janney Montgomery Scott
with $53 billion in assets under management.
Spot gold <XAU=> dropped 0.6 percent to $1,428.20 an ounce
as of 2:01 p.m. EDT (1801 GMT), sharply off its low at
$1,412.55 hit earlier in the session.
Bullion has risen 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> settled down 0.8
percent at $1,428.90, with COMEX trading volume slightly below
its 30-day average after strong turnover earlier this week
partly due to contract rollover.
Gold recorded a 10th consecutive quarter of gains in the
first three months of 2011, but 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 on U.S. 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," Luschini said.
Luschini said 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 debt sale by Portugal 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 at CIBC World Markets.
HAWKISH FED COMMENTS, ECB IN FOCUS
Even as most economists agree the Fed will not tighten
monetary policy 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 raise interest rates this month.
Investment products such as gold-backed exchange-traded
funds saw less interest, with the No. 1 SPDR Gold Trust <GLD>
reporting its biggest ever quarterly outflow in the first
quarter.
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 rose to a record
in the same period. []
Silver <XAG=> gained 0.2 percent to $37.69 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. []
Platinum <XPT=> rose 0.2 percent to $1,768.99 an ounce,
while palladium <XPD=> climbed 1.6 percent to $770.22.
Prices at 2:01 p.m. EDT (1801 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCM1> 1428.90 -11.00 -0.8% 0.5%
US silver <SIK1> 37.888 0.000 0.0% 22.5%
US platinum <PLN1> 1776.90 -6.30 -0.4% -0.1%
US palladium <PAM1> 775.05 7.15 0.9% -3.5%
Gold <XAU=> 1428.20 -8.28 -0.6% 0.6%
Silver <XAG=> 37.69 0.09 0.2% 22.1%
Platinum <XPT=> 1768.99 2.69 0.2% 0.1%
Palladium <XPD=> 770.22 11.87 1.6% -3.7%
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 Dale
Hudson)
