Gold firms above 3-1/2 month low after sluggish US jobs data

SINGAPORE - Gold was steady above a 3-1/2 month low on Friday, as sluggish US jobs data tempered expectations for a September rate hike by the Federal Reserve and hurt the dollar. Spot gold was steady at $1,166.60 an ounce by 0331 GMT. The metal fell to $1,156.85 on Thursday, its lowest since mid-March, but pared losses after US economic data. For the week, bullion is still down 0.7 percent, its second straight weekly loss, due to gains in the dollar earlier in the week from the Greek debt crisis. "The soft US employment data has helped gold for the moment but I don't see much more upside here unless the dollar drops sharply," said a precious metal trader in Hong Kong. "Liquidity will likely be thin today with the US markets out, so the next trigger could be Sunday's referendum in Greece," the trader said. US markets will be closed on Friday in observance of Independence Day.  Data on Thursday showed nonfarm payrolls rose 223,000 last month, below expectations. Payrolls growth in April and May was also revised downwards. At least 432,000 people dropped out of the labour force.  Before the data, there had been strong expectations that the Fed would raise interest rates for the first time in nearly a decade in September, given recent strong data on consumer spending and housing. But the softer-than-expected jobs data prompted investors to lower their bets for a September rate hike. The US dollar index fell from a three-week high. Gold has been under pressure all year from uncertainty over the timing of a rate hike as higher rates could dent demand for non-interest-paying bullion and boost the dollar.  SPDR Gold Trust, the top gold-backed exchange-traded fund, said its holdings fell 0.25 percent to 709.65 tonnes on Thursday, not too far from a near-six-year low hit last month. Despite Thursday's losses, the greenback is on track for a second straight weekly gain as the Greek debt crisis hurt the euro, capping gains in bullion. Athens defaulted on a loan repayment to the International Monetary Fund this week. Greece's left-wing government called a referendum for Sunday after five months of acrimonious talks with its official creditors over an aid-for-reforms deal broke  down without a deal. The crisis could drive more risk-averse money into gold if Greece leaves the euro zone, or if contagion reaches other economies in the bloc, such as Italy, Portugal or Spain, traders said. - Reuters