PRECIOUS-Gold slides 2% as solid U.S. jobs data trims Fed rate cut bets

* Gold on track for worst week since mid-April
* Robust U.S. jobs data knocks gold below $1,400 an ounce
* Nonfarm payrolls increased 224,000 in June vs 160,000
expected
* Palladium set to post fifth weekly rise

(Updates prices)
By Swati Verma
July 5 (Reuters) - Gold slid as much as 2% on Friday and was
set for its first weekly fall in seven weeks after data showed
U.S. jobs growth rebounded strongly in June, which lowered the
likelihood of an interest rate cut by the Federal Reserve this
month.
Spot gold XAU= dropped 1.2% to $1,398.71 per ounce by 1:43
p.m. EDT (1749 GMT) having hit a low of $1,386.52 earlier. The
metal is set for a weekly decline of about 1%, which could be
its biggest since mid-April.
U.S. gold futures GCcv1 settled 1.5% down at $1,400.10.
Nonfarm payrolls increased by 224,000 jobs last month, the
most in five months, data showed. Economists polled by Reuters
had forecast payrolls rising by 160,000 jobs. "The U.S. jobs data is driving all the pressure on gold
right now. The payroll numbers crushed all expectations. That
may decrease the urgency for a Fed cut in July," said Chris
Gaffney, president of world markets at TIAA Bank.
Adding pressure on gold, the dollar .DXY surged to an over
two-week peak against a basket of six major currencies. USD/
Gold is highly sensitive to interest rates and a lower
chance of a cut would increase the opportunity cost of holding
the non-interest-bearing bullion.
Federal funds futures implied traders now see only a 9.0%
chance the U.S. central bank will decrease key money market
rates by half a point, down from 29% on Wednesday, according to
CME Group's FedWatch program. "Most of the markets though, still see some kind of cut but
it pulls away that expectation of a 50-basis-points cut and most
of what can be expected is a quarter-basis-point cut," Gaffney
said.
The outlook for gold still remains positive, however,
analysts said. Gold hit a six-year high of $1,438.63 an ounce
last week and is still holding above key technical levels.
"The yellow metal will likely find buyers as the global
growth slowdown should keep demand strong for gold," Edward
Moya, senior market analyst at OANDA, said in a note.
Gold is often seen as an alternative investment during times
of political and financial uncertainty.
Meanwhile, in India, the world's second largest gold
consumer, local rates surged to record highs following a
surprise hike in the gold import duty on Friday.
GOL/AS
The announcement is likely to increase the price paid by
consumers, Capital Economics said in a note.
"While we had already been anticipating a slowdown in
India's gold imports this year, soaring prices and higher
tariffs present an additional headwind to demand."
Silver XAG= slid 1.9% to $14.99 per ounce, while platinum
XPT= dipped 3.4% to $804.
Palladium XPD= gained 0.58% to $1,571.01 an ounce and was
heading for a fifth straight weekly gain.