PRECIOUS-Gold rises after steep fall as focus turns to Fed meeting

* SPDR gold holdings dipped on Friday
* Speculators cut bullish positions in COMEX gold
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(Updates prices)
By K. Sathya Narayanan
June 8 (Reuters) - Gold rose on Monday, helped by technical
buying after the previous session's steep fall, while investors
await the U.S. Federal Reserve's monetary policy meeting
following a surprise rise in employment numbers.
Spot gold XAU= firmed by 0.4% to $1,692.12 an ounce at
1224 GMT. U.S. gold futures GCcv1 rose 0.8% to $1,696.80.
"The break below $1,700 on Friday is once again attracting
some demand from investors, who have been waiting on the
sidelines for a correction," said Saxo Bank analyst Ole Hansen.
Bullion fell as much as 2.4% to $1,670.14 on Friday, its
lowest in a month, after an unexpected rise in U.S. employment
data increased hopes for a swift recovery in the global economy
and lifted appetite for riskier assets. MKTS/GLOB
Market participants are now waiting for the U.S. Central
Bank's two-day policy meeting, which ends on Wednesday, but have
stopped pricing in the possibility of negative interest rates
after Friday's jobs report. However, Commerzbank analysts expect gold to remain well
supported by the wider economic backdrop, which points to zero
interest rates for the foreseeable future, as does an inflation
rate sitting below the Fed's target.
Gold tends to gain when interest rates are low, which
reduces the opportunity cost of holding non-yielding bullion.
Gold is also seen as a hedge against inflation.
Meanwhile, holdings in the world's largest gold-backed
exchange-traded fund, SPDR Gold Trust GLD , dipped 0.4% on
Friday. Speculators also cut their bullish positions in COMEX
gold in the week to June 2. CFTC/ GOL/ETF
The Perth Mint's sales of gold and silver products tumbled
in May from the previous month, the refiner said on Monday, as
hopes of a quick global economic recovery dented safe-haven
demand for precious metals. In other precious metals, spot silver XAG= advanced 1.6%
to $17.65 an ounce, platinum XPT= gained 0.1% to $836.93 and
palladium XPD= eased by 0.1% to $1,951.06.