Gold steadies below seven-week highs, U.S. data awaited

By Maytaal Angel

LONDON (Reuters) - Gold steadied on Thursday after nearing a seven-week high in the previous session as investors awaited U.S. jobs data for further clues on the outlook for interest rate rises.

Gold rallied through most of July as the dollar fell on reduced expectations for a third U.S. rate rise this year. Inflation has been contained even though the labour market appears to be in its best shape in many years and despite double-digit U.S. earnings growth in the second quarter.

Reduced rate rise expectations tend to weaken the dollar, making dollar-priced gold cheaper for non-U.S. investors.

Spot gold was 0.1 percent higher at $1,267.30 per ounce by 1356 GMT after touching $1,258.20 earlier, its lowest in almost a week. It hit $1,272.84 on Wednesday, near Tuesday's seven-week high of $1,273.97. U.S. gold futures for December delivery fell 0.4 percent to $1,273.30 per ounce.

"We're still in a $1,200-$1,300 range and there doesn't seem enough of anything material to worry investors sufficiently to break us through that upper level," ICBC Standard Bank analyst Tom Kendall said.

"On the downside it's been very similar, on recent occasions where (gold has) got close to $1,200 its been well supported through a combination of physical demand and defensive buying from macro investors."

The U.S. dollar steadied above a 2-1/2-year low against the euro hit in the previous session but was still looking wobbly. Futures markets now only see a 35 percent chance of another rate rise by the end of 2017.

Spot gold may retest support at $1,258 per ounce, a break below which could cause a fall to the next support at $1,247, according to Reuters technical analyst, Wang Tao.

Global demand for gold fell 14 percent in the first half of the year due mainly to a sharp decline in purchases by exchange traded funds, the World Gold Council said.

Silver rose 0.5 percent to $16.64 per ounce after hitting its lowest in more than a week earlier in the day.

Platinum rose 1.9 percent to $960.30 per ounce after rising to its highest since June 7 at $960.80.

Palladium was 0.3 percent lower at $893.30 per ounce, on track to break a streak of nine-sessions of gains.

(Additional reporting by Nithin Prasad and Arpan Varghese in Bengaluru; editing by David Clarke and David Evans)