*

Trump says 'potential deals' with India, South Korea,

Japan

possible

*

US economy shrinks in first quarter of fiscal 2025

*

US nonfarm payroll report due on Friday

(Updates With U.S. morning hours)

By Anjana Anil

May 1 (Reuters) - Gold dipped to a two-week low on

Thursday, pressured by signals of softening trade tensions and a

holiday in top consumer China, while focus was also on Friday's

U.S. payrolls report to gauge the economic outlook.

Spot gold was down 2% at $3,222.43 an ounce at 9:30

a.m. ET (1330 GMT), after hitting its lowest since April 14

earlier in the session. Prices hit a record $3,500.05/oz last

week.

U.S. gold futures were down 2.7% to $3,231.00.

"There's hints of upcoming trade deals, and talk from China

that the Trump administration had reached out. A risk-on trade

is going on, leading to some profit-taking in gold's

safe-haven," said Bob Haberkorn, senior market strategist at RJO

Futures.

U.S. President Donald Trump said trade agreements could be

reached with India, Japan, and South Korea. There is a "very

good chance" of securing a deal with China, he added.

Additionally, a social media account affiliated with Chinese

state media said the U.S. has approached China to seek talks

over Trump's 145% tariffs.

Chinese markets were closed for the Labour Day holiday until

May 6. TD Securities in a note highlighted that "gold is being

sucked into China's holiday-induced liquidity vacuum."

Data on Wednesday showed that the U.S. economy contracted in

the first quarter, and the U.S. personal consumption

expenditures price index was unchanged in March. Now, all eyes

are on the U.S. nonfarm payrolls report due on Friday.

Federal Reserve policymakers indicated interest rates would

remain unchanged until there were clear signs of lowering

inflation to the 2% goal or potential job market deterioration.

Lower interest rates and geopolitical uncertainty raise

non-yielding bullion's appeal.

"While the short-term correction has been driven by improved

market sentiment, the structural drivers underpinning gold's

strength remain firmly in place," Ole Hansen, head of commodity

strategy at Saxo Bank, wrote.

Spot silver fell 0.8% to $32.3, platinum eased

0.3% to $963.84, and palladium gained 1.1% to $948.50.