Gold pares gains as Yellen points to U.S. labor market concerns

By Marcy Nicholson and Clara Denina

NEW YORK/LONDON (Reuters) - Gold gave up earlier gains on Friday, after the U.S. Federal Reserve chair Janet Yellen said she expects the Fed to raise interest rates at some point this year but pointed to concerns that U.S. labor markets remain weak.

In a speech that cautioned about the status of workers as well as some of the international risks that have developed, Yellen gave no direct hint about whether she anticipates more than one rate hike over the Fed's four remaining meetings in 2015.

Spot gold was up 0.1 percent at $1,159.71 an ounce at 12:46 p.m. EDT (1646 GMT). Prices remained near a four-month low reached on Wednesday at $1,146.75.

U.S. gold for August delivery was down 0.03 percent at $1,159 an ounce.

The U.S. dollar pared its losses against a basket of major currencies with the speech and the euro gave back some of its gains against the greenback.

"Gold is getting some support from the stronger euro but if we get a deal with Greece on Sunday, it should be bearish for gold because it removes any risk," Societe Generale analyst Robin Bhar said.

Physical demand remained tepid this week as prospective investors in China chased bargains in equities after a market rout, while those in India delayed purchases.

"We are seeing the chance of a break below $1,150 an ounce in coming sessions. That could perhaps help generate some physical demand in Asia," MKS SA head of trading Afshin Nabavi said.

The metal in India was still sold at a discount to the global benchmark.

Chinese stocks rose sharply for a second day on Friday after Beijing moved to stem a rout that pulled down key indexes by around 30 percent from mid-June, banning shareholders with large stakes in listed firms from selling.

Also aiding gold, the International Monetary Fund trimmed its forecast for global economic growth this year to 3.3 percent from a previous estimate of 3.5 percent, citing recent weakness in the United States.

Silver was up 0.9 percent at $15.51 an ounce, palladium rose 1.5 percent to $647.22 an ounce and platinum gained 0.5 percent to $1,025.25 an ounce, slightly rebounding from a 6-1/2 year low near $1,000 hit on Wednesday.

(Additional reporting by Manolo Serapio Jr in Manila; Editing by Pravin Char and Christian Plumb)