Gold bounced from a 5-week low on Friday as weaker prices ignited buying by bargain hunters and jewelers, but investors were cautious ahead of the release of a U.S. employment report.

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. Gold tumbled nearly 4 percent on Thursday as funds sold bullion to cover losses in other markets.

Spot gold hit a low of $1,196.00, its weakest since May 25, before rebounding to $1,206.45 per ounce by 0312 GMT, up $7.80 from New York’s notional close as the Nikkei edged up and the euro steadied. Gold struck a record $1,264 last week.

The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust (GLD.P) said its holdings dropped to 1,319.219 tonnes by July 1 from a record of 1,320.436 tonnes on June 29 — the first decline since early June.

U.S. gold futures for August delivery steadied at $1,207.3 an ounce.

Dealers in Singapore noted bargain hunting as well as a surge in physical demand from Thailand, keeping premiums for gold bars steady at 40 to 60 U.S. cents an ounce to the spot London prices.

Light buying from jewelers stirred up physical trading in Hong Kong, where premiums were also steady at 50 cents, but there was a lack of interest from investors.

Posted by Shayne Heffernan on Jul 2nd, 2010and filed underEquities, Latest News, Markets, USA.You can follow any responses to this entry through theRSS 2.0You can leave a response by filling following comment form or trackback to this entry from your site