Gold slips ahead of US jobs data, ECB meet

LONDON, July 3 (Reuters): Gold slipped on Thursday as the dollar and equity markets strengthened, while investors awaited a European Central Bank meeting and US jobs data to gauge the strength of the global economy and the fate of stimulus measures by central banks.
Strong figures from payrolls processor ADP report heightened expectations that June US nonfarm payrolls due at 1230 GMT would show the US economy was picking up speed after a dismal start to the year.
A Reuters poll forecast non-farm payroll gains of 212,000 which would mark a fifth month above 200,000.
Spot gold was down 0.4 per cent to $1,322.70 an ounce by 1016 GMT. It hit a 3-month high of $1,332.10 hit earlier this week as tensions in Iraq and Ukraine stoked demand for the metal as an insurance against geopolitical risk.
US gold futures for August delivery were down 0.5 per cent at $1,323.90 an ounce.
The dollar rose 0.1 per cent against a basket of currencies, while world shares hovered below all-time highs.
A stronger US currency makes dollar-denominated assets like gold more expensive for foreign investors. The metal tends to hold an inverse correlation with equity markets, with investors seeking refuge in gold when appetite for risk diminishes.
"The dollar gained some strength on the back of yesterday's data, which is not supportive for gold but unless there is a significant surprise in the US nonfarm payrolls, we don't see gold collapsing," Natixis analyst Bernard Dahdah said.
"Prices should come under pressure below $1,300 in the longer term, as the US economy gets gradually better and investors find fewer reasons to put their money into safe assets like gold."
Data on Wednesday showed that US private-sector hiring hit a 1-1/2-year high in June.
"Given the factors currently lined up against gold - positioning, weak physical markets, and potentially strong employment - any sign of resilience in the face of stronger data will be an important signal that investors may be becoming friendlier to gold," UBS said in a note.
"On the other hand, weaker-than-expected US data today is likely to perpetuate the generally sanguine mood in the gold market of late."
The technical picture also looked weak with Reuters technical analyst Wang Tao saying gold may retrace to $1,316 as it has failed to break a resistance at $1,334 twice.
Meanwhile, physical demand for gold has been lacklustre due to the recent rally in prices. In top buyer China, domestic prices were at a discount of $1-$2 an ounce to global prices, underscoring sluggish demand.