* Gold retreats after Tuesday's 1.7 pct gain
* Fed Chair Yellen urges caution on rate hikes
* Traders await U.S. jobs data on Friday for more cues
* GRAPHIC-2016 asset returns: http://reut.rs/1WAiOSC
(Updates prices, adds comment)
By Jan Harvey
LONDON, March 30 (Reuters) - Gold fell on Wednesday as a
rally in assets seen as higher risk, such as equities, prompted
some investors to cash in gains sparked the previous day by Fed
chair Janet Yellen's cautious tone on further rate hikes.
Yellen's signal that interest rates will likely rise only
gradually reassured gold investors, as higher rates boost the
opportunity cost of holding non-yielding assets like bullion.
The metal remains on track for its best quarter in nearly 30
years, up 16.4 percent, after prices rallied sharply earlier in
the year as worries about economic growth, particularly in
China, shook up stock markets.
Consequent demand for safe havens, combined with receding
expectations for further U.S. Federal Reserve rate hikes, have
driven gold up more than 16 percent since January, making this
its strongest quarter so far since the third quarter of 1986.
Spot gold XAU= was at $1,232.63 an ounce at 1330 GMT,
down 0.7 percent, having risen 1.7 percent on Tuesday after
Yellen's speech. U.S. gold futures GCv1 for April delivery
were down $2.40 an ounce at $1,235.10.
"There was quite a big move yesterday from $1,220 to $1,240,
which was really in line with what Yellen said. You had dollar
weakness, but the gold move was stronger, which suggests some
genuine interest in gold," Julius Baer analyst Carsten Menke
said.
"But overall, the strength in gold has also been driven by
global growth fears, and this is slowly ebbing as market
participants get less afraid about the global economy. In the
equity market today, prices are up again. The weakness in gold
we're seeing today is a mirror image of the positive mood in
financial markets overall."
World stocks climbed near the highest levels this year on
Wednesday as investors rolled back expectations for how fast and
how far U.S. interest rates might rise. MKTS/GLOB
Holdings of the world's biggest gold-backed exchange-traded
fund, SPDR Gold Shares GLD , declined for the first day in two
weeks on Tuesday, by 3.3 tonnes. GOL/ETF
Focus is now shifting to the main U.S. jobs data later this
week.
"Though the rally looks intact it can be dented by a good
employment number in the non-farm payrolls release for March
scheduled for Friday," HSBC said in a note. "A number above
200,000 new net jobs could wear on gold and clip recent gains."
Among other precious metals, silver XAG= was flat at
$15.34 an ounce, platinum XPT= was up 0.7 percent at $974.17
an ounce and palladium XPD= was down 0.3 percent at $571.39 an
ounce.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
GRAPHIC-2016 asset returns: http://reut.rs/1WAiOSC
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>