PRECIOUS-Gold gains 1% as poor U.S. data ignites growth worries

* U.S. services sector marks slowest growth in 3 years
* Dollar touches 4-week lows versus yen
* SPDR gold holdings near 3-year peak

(Updates prices)
By Sumita Layek
Oct 3 (Reuters) - Gold jumped more than 1% to its highest in
a week on Thursday as weak U.S. data deepened concerns over
economic growth and bolstered bets for further interest rate
cuts by the Federal Reserve.
Spot gold XAU= was up 0.5% at $1,506.45 per ounce by 1:52
p.m. EDT (1752 GMT). Earlier, prices had hit their highest since
Sept. 25 at $1,518.50.
U.S. gold futures GCcv1 settled 0.4% higher at $1,513.80
an ounce.
U.S. services sector growth hit its slowest pace in three
years last month, and job growth in the largest segment of the
economy was the weakest in half a decade, a survey of purchasing
managers showed. "We continue to see a string of weak economic data that
exacerbate concerns about economic growth. On the back of that,
we are seeing safe haven demand return significantly in products
like gold," said David Meger, director of metals trading at High
Ridge Futures.
"This also brings prospects of rate cuts at the end of
October ... and lower interest rates are supportive for gold."
Data earlier in the week showed manufacturing contracted to
the weakest level in a decade and hiring by U.S. private
employers slowed further in September. The weaker-than-expected U.S. economic data weighed on
global financial markets, extending a stock slide that has
pushed world equity benchmarks back to lows last seen in August.
MKTS/GLOB
Adding to the economic uncertainty, Washington on Wednesday
said it would slap tariffs on certain products from the European
Union. "Data is showing a slowdown and traders are gravitating into
gold and precious metals," said Michael Matousek, head trader at
U.S. Global Investors.
"The tariffs are pretty much what is causing the slowdown in
the ISM numbers. More tariffs make people's anticipation of the
economic data weaker, so you might as well start buying what
will work in future and that is gold."
Further helping gold, the dollar fell to a four-week low
against the yen and a one-week trough versus the euro. USD/
Holdings of the world's largest gold-backed exchange-traded
fund, SPDR Gold Shares GLD , rose to 923.76 tonnes on
Wednesday, very close to last week's 924.94 tonnes, their
highest since mid-November 2016. GOL/ETF
Platinum XPT= rose 0.2% to $888.59 per ounce, while silver
XAG= gained 0.3% to $17.60 an ounce.
Palladium XPD= slid 2% at $1,653.17 per ounce.
The metal used in vehicle exhausts to reduce harmful
emissions is likely to rise still higher after growing demand
from automakers and a gaping supply shortfall pushed prices to
record levels above $1,700 an ounce this week, analysts said.