*

Trump says he has "potential deals" with India, South

Korea and

Japan

*

US economy shrinks in first quarter of fiscal 2025

*

US nonfarm payroll report due on Friday

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Weaker payroll report may push gold to $3,500 over the

coming

months, analyst says

(Adds comment, updates for EMEA morning session)

By Anmol Choubey

May 1 (Reuters) - Gold fell more than 1% to a two-week

low on Thursday, weakened as signs of easing trade tensions

enhanced risk appetite and reduced bullion's safe-haven appeal,

while a stronger U.S. dollar also weighed on prices.

Spot gold fell 1.8% to $3,230.24 an ounce as of 0751

GMT, after hitting its lowest since April 15.

U.S. gold futures lost 2.4% to $3,238.60.

The dollar index rose 0.5%, making dollar-denominated

gold more expensive for buyers holding other currencies.

"There is ongoing hope that some trade deals are signed soon

allowing lower tariffs to stay," said UBS analyst Giovanni

Staunovo, adding that this optimism, combined with a stronger

dollar, is exerting pressure on the gold.

U.S. President Donald Trump said on Wednesday trade deals

were possible with India, Japan and South Korea. He also said

there was a "very good chance" of a deal with China.

The U.S. economy contracted for the first time in three

years in first quarter, weakened by a surge of imports as

businesses sought to pre-empt the imposition of higher tariffs.

However, Federal Reserve policymakers indicated that

short-term interest rates would remain unchanged until there are

clear signs of inflation nearing the central bank's 2% goal or

potential job market deterioration.

Investors await Friday's nonfarm payrolls report for further

insight into the Fed's policy direction.

"A weaker payroll report should support calls for more rate

cuts by the Fed this year and allow gold to move back to

$3,500/oz over the coming months," said Giovanni Staunovo.

Analysts in a quarterly Reuters poll have forecast an

average annual gold price above $3,000 for the first time.

The World Gold Council reported a 1% year-on-year increase

in global gold demand, including over-the-counter trading, to

1,206 metric tons in first quarter of 2025, driven by a 170%

surge in investment.

Gold, a non-yielding metal considered a hedge against

political and financial turmoil, briefly hit $3,500 last week.

Spot silver fell 1.5% to $32.11 an ounce, platinum

shed 1% to $956.82 and palladium was steady at

$937.53.