Gold claws back on bargain buying

on July 02 2010 2:40 AM

Gold prices rebounded in Asian trade Friday mainly on bargain buying and euro's recovery against the dollar.

Gold for immediate delivery was seen trading at $ 1206.39 an ounce at 12.00 noon Singapore time while U.S. gold futures for August delivery was at $1,207.3 an ounce.

However, analysts said gold prices remained highly volatile Friday as investors were cautious ahead of the release of a U.S. employment report.

The euro held near five-week highs against the U.S. dollar on Friday after rallying three whole cents as speculators were squeezed out of short positions ahead of the job data.

Investors shrugged off a small drop in ETF holdings, turning their attention to the June non-farm payrolls data which will set the tone for currencies and equities.

The world's largest gold-backed exchange-traded fund, SPDR Gold Trust said its holdings dropped to 1,319.219 tones by July 1 from a record of 1,320.436 tones.

On Thursday, the precious yellow metal tumbled nearly 4 percent as funds sold bullion to cover losses in other markets.

Gold futures for delivery in August fell $39.20, or 3.1 percent, to close at $1,206.70 in New York, marking the biggest drop for a most-active contract since Feb. 4. Spot gold also broke below $1,200 in late New York trade to settle at $1198.65.

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