* Gold steady after gaining 1 pct in the last two sessions
* Analysts warn of further drop to $1,000/oz
* Traders await U.S. jobs report on Friday for cues
(Updates prices)
By A. Ananthalakshmi
SINGAPORE, Dec 2 (Reuters) - Gold clung to gains from a
two-day rally on Wednesday, supported by short-covering
following a dip in the dollar after soft U.S. manufacturing
data.
The outlook for the metal, however, remains bearish due to a
looming U.S. rate hike, with all eyes now on the U.S. non-farm
payrolls data due later in the week. A strong jobs report would
further bolster the likelihood of a hike later this month,
reducing the appeal of dollar-denominated gold.
Spot gold XAU= slipped slightly to $1,067.80 an ounce by
0704 GMT, after gaining about 1 percent in the past two
sessions.
"The fate of gold is still very much determined by U.S.
monetary policy," said Mark To, head of research at Hong Kong's
Wing Fung Financial Group. "Prices will consolidate around
current levels until the policy meet in mid-December."
The expected U.S. interest rate increase will drag gold
prices to the $1,000 level, he added.
Bullion fell to a near-six-year low last month and posted
its biggest monthly drop in 2-1/2 years in November as investors
believed higher rates could weaken demand for
non-interest-paying bullion.
The Federal Reserve is widely expected to raise U.S. rates
for the first time in nearly a decade at its next meeting on
Dec. 15-16.
ABN Amro on Tuesday maintained its negative outlook for gold
prices in 2016, mainly on expectations the Fed would slowly
raise rates into next year, and said prices could fall below
$1,000 per ounce in the coming months.
Traders will be eyeing U.S. payrolls data on Friday to gauge
the strength of the economy and its impact on the Fed's rate
decision.
Data on Tuesday showed U.S. manufacturing contracted in
November for the first time in three years, though other data
showed an increase in construction spending in October. Analysts
said the manufacturing weakness will not deter the Fed from
raising rates this month.
The U.S. dollar fell from an 8-1/2 month high on the weak
data on Tuesday, but ticked up on Wednesday. USD/
The dollar weakness likely required some bullion investors
to unwind and cover their short positions in the precious metal,
prompting the gains during the last two days. Hedge funds and
money managers are holding a record net short position in COMEX
gold contracts, data on Monday showed.
PRICES AT 0704 GMT
Metal Last Change Pct chg
Spot gold 1067.8 -1.31 -0.12
Spot silver 14.13 -0.067 -0.47
Spot platinum 837.5 -1.23 -0.15
Spot palladium 537.98 -0.24 -0.04
Comex gold 1067 3.5 0.33
Comex silver 14.16 0.077 0.55
COMEX gold and silver contracts show the
most active months
* Analysts warn of further drop to $1,000/oz
* Traders await U.S. jobs report on Friday for cues
(Updates prices)
By A. Ananthalakshmi
SINGAPORE, Dec 2 (Reuters) - Gold clung to gains from a
two-day rally on Wednesday, supported by short-covering
following a dip in the dollar after soft U.S. manufacturing
data.
The outlook for the metal, however, remains bearish due to a
looming U.S. rate hike, with all eyes now on the U.S. non-farm
payrolls data due later in the week. A strong jobs report would
further bolster the likelihood of a hike later this month,
reducing the appeal of dollar-denominated gold.
Spot gold XAU= slipped slightly to $1,067.80 an ounce by
0704 GMT, after gaining about 1 percent in the past two
sessions.
"The fate of gold is still very much determined by U.S.
monetary policy," said Mark To, head of research at Hong Kong's
Wing Fung Financial Group. "Prices will consolidate around
current levels until the policy meet in mid-December."
The expected U.S. interest rate increase will drag gold
prices to the $1,000 level, he added.
Bullion fell to a near-six-year low last month and posted
its biggest monthly drop in 2-1/2 years in November as investors
believed higher rates could weaken demand for
non-interest-paying bullion.
The Federal Reserve is widely expected to raise U.S. rates
for the first time in nearly a decade at its next meeting on
Dec. 15-16.
ABN Amro on Tuesday maintained its negative outlook for gold
prices in 2016, mainly on expectations the Fed would slowly
raise rates into next year, and said prices could fall below
$1,000 per ounce in the coming months.
Traders will be eyeing U.S. payrolls data on Friday to gauge
the strength of the economy and its impact on the Fed's rate
decision.
Data on Tuesday showed U.S. manufacturing contracted in
November for the first time in three years, though other data
showed an increase in construction spending in October. Analysts
said the manufacturing weakness will not deter the Fed from
raising rates this month.
The U.S. dollar fell from an 8-1/2 month high on the weak
data on Tuesday, but ticked up on Wednesday. USD/
The dollar weakness likely required some bullion investors
to unwind and cover their short positions in the precious metal,
prompting the gains during the last two days. Hedge funds and
money managers are holding a record net short position in COMEX
gold contracts, data on Monday showed.
PRICES AT 0704 GMT
Metal Last Change Pct chg
Spot gold 1067.8 -1.31 -0.12
Spot silver 14.13 -0.067 -0.47
Spot platinum 837.5 -1.23 -0.15
Spot palladium 537.98 -0.24 -0.04
Comex gold 1067 3.5 0.33
Comex silver 14.16 0.077 0.55
COMEX gold and silver contracts show the
most active months