PRECIOUS-Gold down, pares losses after US jobs data
* U.S. non-farm payrolls data helps lift prices from lows
* Gold under pressure as Fed minutes show concerns over stimulus
* Silver underperforms gold; platinum, palladium outperform
LONDON, Jan 4 (Reuters) - Gold fell on Friday, but U.S. data showing job growth was cooling led to a partial recovery in the metal from an earlier drop to a 4-1/2 month low.
The slide early in the day followed minutes from the U.S. Federal Reserve, which highlighted increasing concerns over its highly stimulative monetary policy.
Spot gold was down 1.1 percent at $1,644.90 an ounce at 1523 GMT, after earlier falling to its lowest since late August at $1,625.79. It still was heading for a sixth week of losses - the longest such run since June 1999.
U.S. gold futures for February fell 1.7 percent or $28.80 an ounce to $1,645.80.
Prices recovered from lows after data showed the pace of hiring by U.S. employers eased slightly in December, suggesting lacklustre economic growth was failing to make inroads in high unemployment rate.
The data fuelled expectations the Fed would not be tightening monetary policy anytime soon and pulled the dollar from early highs against a currency basket.
"The dollar index was near mid-November highs, (but it) came off and gold went back up," Andrey Kryuchenkov, an analyst with VTB Capital, said.
Expectations that central bank money-printing to buy assets would keep pressure on interest rates and stoke inflation have been a key driver of gold, which hit an 11-month high in October after the Fed announced a third round of economic stimulus.
The Fed has linked the continuation of its money-printing policy to evidence of a sustained upturn in the jobs market. Ultra-loose monetary policy had led to historically low interest rates and rising fears of inflation, fuelling the rally in gold.
Minutes from the Fed's December policy meeting released on Thursday showed some voting members of the Federal Open Market Committee were increasingly worried about the potential risks of the Fed's asset purchases on financial markets.
Christin Tuxen, an analyst with Danske Bank, said the gold market had been focused on the size of the QE programme rather than on when it would be phased out.
"The timing will be earlier than the market had been initially expecting, which is negative for gold," Tuxen said.
BULLISH ON GOLD
The broader backdrop for gold remains supportive, however.
"Unless the Fed indicates that it will actually start shrinking its balance sheet (as opposed to just keeping it constant) and real interest rates edge towards positive territory, strategically we remain bullish on gold in 2013," Standard Bank said in a note.
"However ... tactically we believe that gold may sell off more in the short term."
From a technical perspective, gold is still looking vulnerable after breaking below its 200-day moving average, a key chart level currently at $1,661 an ounce. Spot prices are still on track for their biggest two-day drop in absolute terms since early November.
Among exchange-traded funds, the SPDR Gold Trust reported an outflow of 9.638 tonnes yesterday, the biggest one-day decline in its holdings since Sept. 26.
Lower prices spurred buying from jewellers in Asia, keeping premiums for gold bars steady in Singapore at $1.10 to $1.20 to spot London prices.
The Shanghai Gold Exchange will lower trading margins and daily trade limits for its gold and silver forward contracts to meet growing investor demand, the bourse said on Friday.
Among other precious metals, silver was down 1.3 percent to $29.76 an ounce, after also slipping to a 4-1/2 month low at $29.20 in earlier trade. Silver's underperformance made the metal its cheapest compared to gold since late August.
Platinum group metals fell, although they outperformed gold and silver. Platinum fell 0.3 percent to $1,554.37 and palladium slipped 0.3 percent to $687.75 an ounce.