* Brexit concerns support gold near two-year high
* Traders await U.S. non-farm payroll data on Friday
* GRAPHIC-2016 asset returns: http://reut.rs/1WAiOSC
(Updates prices, adds comment)
By Jan Harvey
LONDON, July 7 (Reuters) - Gold slipped on Thursday as U.S.
jobs data supported the dollar, after rallying to its highest
level since March 2014 a day earlier on the back of concerns
about Britain's vote to leave the European Union.
Financial markets have been extremely volatile since Britain
voted in a referendum on June 23 to leave the EU, knocking
equities and pushing some bond yields to record lows. The moves
have boosted the appeal of so-called safe-havens such as gold
and silver.
Spot prices reached their highest level since March 2014 on
Wednesday at $1,374.91 an ounce but have struggled to maintain
those levels as stocks and the U.S. dollar rose.
Spot gold XAU= was at $1,354.91 an ounce at 1340 GMT, down
0.6 percent, while U.S. gold futures GCv1 for August delivery
were down $10.60 an ounce at $1,356.50.
Mitsubishi analyst Jonathan Butler said while the stronger
dollar was a headwind for gold, it still looked set for further
gains after rallying more than 10 percent since the Brexit vote.
"I think gold could make further gains towards $1,381, the
38.2 percent Fibonacci retracement of 2011 high to 2015 low, and
above that the $1400 psychological level," he said.
Traders are awaiting further clues on the outlook for
Federal Reserve policy from Friday's U.S. non-farm payrolls
(NFP) data, seen as a barometer of the economy's health.
Gold jumped last month after data showed a slowdown in
hiring in May. Another weak reading could indicate that the Fed
will hold off on further rate increases, particularly given the
economic uncertainty following the Brexit vote.
"In the last few weeks we've seen a two-step move. First, we
had the Brexit vote, which led to a rise in safe-haven demand,
and then we saw markets starting to reprice monetary policy
among central banks," Danske Bank analyst Jens Pedersen said.
"We had these two factors working in the same direction for
gold."
Gold is highly sensitive to rising U.S. interest rates as
they lift the opportunity cost of holding non-yielding assets
such as bullion, while also typically boosting the dollar, in
which the precious metal is priced.
"In the short term, I do see a risk that the dollar will
rise further, so that will again cap the upside for gold,"
Pedersen said.
Elsewhere, data showed China's gold reserves rose to 58.62
million ounces at the end of June from 58.14 million a month
before.
Silver XAG= was down 1.9 percent at $19.65 an ounce, while
platinum XPT= was up 0.1 percent at $1,082.80 an ounce and
palladium XPD= was down 0.1 percent at $604 an ounce.
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GRAPHIC-2016 asset returns: http://reut.rs/1WAiOSC
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(Additional reporting By Nallur Sethuraman and Vijaykumar
Vedala in Bengaluru; editing by David Evans, Greg Mahlich)