* China gold holdings unchanged in May
* Weaker labor data could translate to upside in gold - analyst
* U.S. nonfarm payrolls data due at 1230 GMT
* Gold to hit another record high this year - Metals Focus
June 7 (Reuters) - Gold prices fell more than 1% on Friday after data showed China's central bank paused gold purchases in May after 18 consecutive months of buying.
Spot gold fell 1.4% to $2,341.37 per ounce as of 0921 GMT. Bullion reversed nearly all weekly gains after the data and is now up 0.6% this week.
The People's Bank of China (PBOC)
did not
add to its strategic reserves for first time since October 2022. It held 72.80 million troy ounces of gold at the end of May, unchanged from the end of April.
Gold prices hit a record $2,449.89 per ounce on May 20, and in the cocktail of factors rallying bullion, a primary driver was strong central bank demand, primarily from China.
The $35 drop has been driven by the news out of China, Ole Hansen, head of commodity strategy at Saxo Bank, said, but added that China is not done buying gold yet.
Markets are looking at the U.S. nonfarm payrolls data due later today, where the job growth is likely to be below analyst expectations.
"If we get a weak jobs report today and with that increased focus on US rate cuts, we could see ETF investors pick up the baton that the PBOC, temporarily, in my opinion, has dropped on the floor," Hansen said.
A run of weak macro data this week added to signs that inflation was cooling and that the Fed would start cutting rates as early as September.
Lower rates reduce the opportunity cost of holding non-yielding bullion.
Spot silver fell 2.3% to $30.59 per ounce, platinum was down 1% at $992.50, and palladium lost 1.6% to $915.00. (Reporting by Harshit Verma in Bengaluru; Editing by Tasim ZAhid)
