* Gold gives up Friday's post-payrolls gains
* Yen tumbles against U.S. dollar
* Silver, platinum and palladium at multi-week lows
(Updates prices; adds comment, second byline, NEW YORK
dateline)
By Marcy Nicholson and Jan Harvey
NEW YORK/LONDON, May 9 (Reuters) - Gold fell 2 percent in
its biggest one-day drop in nearly seven weeks on Monday as the
strengthening dollar and a sharper appetite for assets seen as
higher risk sparked selling across commodities.
The metal's failure to break back above $1,300 in the wake
of a weaker than expected U.S. jobs report on Friday is also
leading some investors to cash in gold gains.
Spot gold XAU= was down 1.9 percent at $1,263.93 an ounce
at 2:37 p.m. EDT (1837 GMT), erasing the 0.8 percent gain made
on Friday after weak non-farm payrolls data. U.S. gold futures
GCv1 for June settled down 2.1 percent at $1,266.60.
The sharp drop came after gold snapped four days of losses
on Friday when the payrolls report showed that the U.S. economy
added the fewest jobs in seven months in April, leaving some
economists expecting only one interest rate hike from the
Federal Reserve this year.
"Positioning has been stubbornly elevated so far this year,
and as a result we hold the view that the market is going to
continue consolidating within the range that has been
established," UBS analyst Joni Teves said.
"The bounce in the dollar has also contributed to (the
pullback), and this period is seasonally slow for gold."
The yen tumbled against the U.S. dollar as Japan signaled it
was ready to intervene in the currency market, while a drop in
oil prices undercut stocks. USD/ MKTS/GLOB
The 19-market Thomson Reuters CoreCommodity Index .TRJCRB
fell 1.6 percent.
"Gold prices are solidly lower in early U.S. trading Monday,
pressured by some profit-taking from recent gains and by better
risk appetite in the general marketplace," Kitco Metals said in
a note.
Hedge funds and money managers raised their net long
positions in COMEX gold contracts to a 2011 high, data showed
late Friday.
"We have turned more positive towards prices due to rising
inflation pressures and our view that real rates will remain
depressed in developed markets beyond 2016," said BMI Research
in a note, raising its 2016 gold price forecast to $1,275 an
ounce.
Gold is up 19 percent this year as expectations for a
near-term interest rate increase by Fed has faded.
Other precious metals followed gold lower, reaching
multi-week lows.
Spot silver XAG= fell as much as 3.2 percent to $16.90 an
ounce while platinum XPT= fell 3.6 percent to $1,036.35 an
ounce, both two-week lows.
Palladium dropped 5.3 percent to $575.08 an ounce, the
lowest since April 19.