* Dollar drifting further away from 2-month highs
* Silver near lowest since mid-April
* U.S. ADP national employment data due later Thursday
(Updates prices)
By Koustav Samanta
BENGALURU, June 2 (Reuters) - Gold inched up on Thursday on
the back of a weaker dollar, as investors assess whether the
latest set of U.S. economic data will boost the prospect of an
early interest rate hike by the Federal Reserve.
Bullion had turned negative on Wednesday after the greenback
got some cushion as data showed U.S. manufacturing activity
expanded for a third straight month in May.
Spot gold XAU= was up 0.2 percent at $1,214.61 per ounce
by 0629 GMT. It fell 0.2 percent on Wednesday to close at
$1,212.40. U.S. gold GCcv1 gained 0.2 percent to $1,217.
The dollar index .DXY , which measures the greenback
against a basket of six major currencies, was down 0.1 percent
on Thursday. A weaker dollar makes gold less expensive for
buyers in other currencies. USD/
The safe-haven metal has been taking a beating over the past
couple of weeks as senior U.S. central bank officials, including
Fed chief Janet Yellen, indicated that a rate rise may be on the
cards sooner rather than later.
"We expect the Fed to move in June rather than in July, in
which case gold could be closer to bottoming out, since we see
the dollar weakening after the move is out of the way," INTL
FCStone analyst Edward Meir said.
Gold is sensitive to interest rates, gains in which raise
the opportunity cost of holding the non-interest-yielding asset.
Investors are looking out for trading cues from the U.S. May
ADP private employment report due later in the day for potential
relief, with the report often seen providing clues to the
non-farm payrolls data, scheduled for release on Friday.
Spot gold is biased to revisit its May 30 low of $1,199.60
per ounce, as it has failed to break a resistance at $1,219,
Reuters technical analyst Wang Tao said.
"We do not think $1,200 is a bottom. Before Fed's July
conference, gold will touch a new bottom of perhaps $1,130-1,140
in the following one and a half months," said Jiang Shu, chief
analyst at Shandong Gold Group, the parent of Shandong Gold
Mining Co Ltd.
"Overall though, because prices have been higher in the
first half of the year, the second half may not be as good for
gold long investors," Shu added.
Holdings in SPDR Gold Trust GLD , the world's largest
gold-backed exchange-traded fund, rose 0.24 percent to 870.74
tonnes on Wednesday, the highest since November 2013. GOL/ETF
Among other precious metals, spot silver XAG= rose 0.3
percent to $15.99 per ounce. Silver had slipped to $15.77 on
Wednesday, its lowest since April 12.