Gold stays near 10-month low, U.S. payroll data in focus

SINGAPORE (Reuters) - Gold steadied on Friday but held near its weakest since May last year as investors waited for key U.S. jobs data for more clues on the health of the world's largest economy, while a drop in ETF holdings dragged on prices.

FUNDAMENTALS

Gold was little changed at $1,553.56 an ounce by 0033 GMT, still heading for a second week of decline. It fell to 1,539.74 on Thursday, its lowest in 10 months, as unprecedented monetary stimulus from the Bank of Japan and hopes for another European Central Bank rate cut failed to stem heavy selling.

Investors will scrutinise Friday's U.S. employment data for more signals on the strength of that economy. A strong report could hurt gold, making it easier for the U.S. Federal Reserve to end stimulus measures that have made some investors worry about inflation in the world's biggest economy.

Bullion holdings at the world's major gold exchange traded funds fell to their lowest since August 2012

After two years of losses, hedge fund manager John Paulson's best-known funds got off to a better start in 2013. His gold fund, however, notched double digit losses during the first three months of 2013.

Gold is gearing up for the start of a bear market cycle in 2014 after more than a decade of gains as consumer demand for jewellery, coins and bars declines and central bank buying plateaus, metals consultancy GFMS said.

U.S. gold for June delivery was at $1,553.70 an ounce, up $1.30.

(Reporting by Lewa Pardomuan; Editing by Joseph Radford)