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Gold ends at lowest in 3-1/2 weeks on data, Greece optimism

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Gold tumbled on Wednesday as shares rose after U.S. data showed its private sector added more jobs than expected in May, and prospects increased of a debt deal for Greece.

Spot gold slipped 1 percent to $1,181 an ounce, while U.S. gold futures for August delivery settled down $9.50, at $1,184.90 an ounce, its lowest since May 11.

U.S. private employers added 201,000 jobs last month, higher than the 165,000 additions in April and economists' estimate of a gain of 200,000 for May.

Gold had risen 0.4 percent in the previous session, only partly benefiting from a 1.5 percent fall in the dollar and weak U.S. factory data, which would typically trigger flight-to-safety bids. Higher European bond yields capped the upside for gold, analysts said.

"The easing of tensions in the euro zone, with optimism around a Greek deal and Draghi's comments, has lifted the stock markets today, dampening interest for safer assets like gold," ActivTrades chief analyst Carlo Alberto de Casa said.

"But a more decisive move for gold could come from the U.S. data front on Friday."

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The metal was depressed by stronger European and U.S. shares, which benefited from strong U.S. employment data and the European Central Bank head's pledge to stick with the bank's loose monetary policy measures.

Wednesday's U.S. jobs data is a precursor to the U.S. Labor Department's non-farm payrolls report on Friday, which will be monitored to gauge the strength of the economy and how it would affect the Federal Reserve's interest rate policy. Higher rates would reduce demand for non-interest-paying bullion.

Investors watched Greece's debt situation after the country's creditors on Tuesday drafted the broad lines of an agreement to put to the government, in a bid to conclude four months of acrimonious negotiations and release aid before the cash-strapped country runs out of money.

Failure to reach agreement this month could trigger a Greek default and lead to the imposition of capital controls and a potential exit from the euro zone, dealing a serious blow to Europe's supposedly irreversible single currency.

Bullion had got some support in recent sessions from the uncertainties over the Greek debt crisis as investors sought safety in the metal.

However, general sentiment towards the metal remained bearish, as shown by outflows from gold exchange-traded funds (ETF), a sign investors are not confident of any price gains.

Holdings in the top eight gold ETFs, funds backed by physical metal, were at a five-year low as of Tuesday.