PRECIOUS-Gold falls as dollar recovers slightly; US payrolls data eyed

By Anjana Anil and Anushree Mukherjee

March 6 (Reuters) - Gold fell on Thursday, hurt by a slight recovery in the U.S. dollar and higher Treasury yields, while investors awaited U.S. nonfarm payrolls data to assess the Federal Reserve's interest rate path amid escalating global trade tensions.

Spot gold XAU= was down 0.5% to $2,903.69 an ounce as of 0852 GMT, while U.S. gold futures GCcv1 also lost 0.5% to $2,910.80.

The dollar index .DXY erased some of its earlier losses, while benchmark U.S. Treasury yields US10YT=RR rose, reducing non-yielding bullion's appeal.

"The dollar index has rebounded from 104.01 to 104.18 - that could have pushed the yellow metal lower further," Reliance Securities' senior analyst Jigar Trivedi said.

However, "the broad undertone is really positive in gold."

The U.S. exempted automakers from the 25% tariffs on Canada and Mexico for a month as long as they complied with existing free trade rules.

U.S. President Donald Trump is also open to hearing about other products that should be exempted from the tariffs, the White House said.

Trump's tariffs have strained relations with Canada, Mexico, and China. While Canada and China have responded with tariffs of their own on select U.S. imports, Mexico has vowed to retaliate.

Worries over Trump's tariff policies has pushed safe-haven gold to a record high of $2,956.15 on February 24 and helped it gain more than 10% year-to-date.

Gold is considered a hedge against political uncertainties and inflation.

"Overall, the outlook still seems to be bullish for gold prices. However, there may be a deeper pull back in the cards for the near term before the larger rally resumes," said Ilya Spivak, head of global macro at Tastylive.

The market awaits Friday's non-farm payrolls report, which is expected to show a gain of 160,000 jobs for February, a Reuters survey showed.

Spot silver XAG= lost 0.5% to $32.47 an ounce, platinum XPT= slipped 0.7% to $959.13, palladium XPD= shed 0.9% to $934.25.