LONDON Gold slipped sharply on Friday after stronger than expected U.S. payrolls data for June but rebounded quickly, underpinned by concerns over the outlook for financial markets after Britain's Brexit vote.
Gold hit a low of $1,335.68 an ounce in the wake of data showing that U.S. non-farm payrolls increased by 287,000 jobs last month, the largest gain since October. That sent the dollar to a two-week high against the euro and reignited talk that the Federal Reserve will lift interest rates this year.
Spot gold, which has risen more than $100 an ounce since Britain voted to quit the EU, was at $1,359.58 by 1330 GMT, little changed from Thursday.
U.S. gold futures for August delivery, which fell as low as $1,336.30 an ounce in the wake of the jobs data, were down 10 cents at $1,362.00.
"The knee-jerk reaction to the stronger than expected payrolls data has been lower, but you're already seeing gold bounce off the lows," UBS analyst Joni Teves said. "That goes back to our view that dips are going to be bought.
"There are still a lot of people out there who want to build gold positions, and will be keen to come in on any retracements."
Traders were awaiting the payrolls data for clues on U.S. monetary policy. Fed futures contracts, which suggested before the jobs report that traders saw only a 19 percent chance of a U.S. rate hike by December, now suggest a higher chance.
Lower rates tend to boost gold prices because they cut the opportunity cost of holding non-yielding bullion while weighing on the dollar, in which it is priced.
Investors poured the most money into United States-based funds invested in precious metals since February, data from Thomson Reuters' Lipper service showed on Thursday.
"The market is very long, with COMEX open interest above 650,000 lots," MKS said in a note.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell by a little more than four tonnes on Thursday to 978.29 tonnes, having posted its biggest daily inflow in six years on Tuesday.
High prices weighed on physical gold demand among Asian consumers. Gold discounts in India soared to a record high of up to $100 an ounce this week as prices in the world's second-largest bullion consumer hit their highest in nearly three years.
Silver was up 1.1 percent at $19.86 an ounce, platinum rose 0.6 percent to $1,092.60 and palladium was 0.3 percent higher at $610.50.
(Additional reporting by Nallur Sethuraman and Vijaykumar Vedala in Bengaluru; Editing by David Goodman)
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Published Date: Jul 08, 2016 10:45 pm | Updated Date: Jul 08, 2016 10:45 pm