* Gold headed for weekly gain of around 1.7 percent * Dollar falls 0.3 percent, European shares flat * Coming up: U.S. nonfarm payrolls at 1230 GMT (Updates prices) By Clara Denina LONDON, June 7 (Reuters) - Gold held above $1,400 an ounce on Friday, on track for their third straight weekly gain, as investors awaited U.S. jobs data for clues on when the Federal Reserve would start tapering off its stimulus programme. Monthly U.S. nonfarm payrolls, due at 1230 GMT, will be scrutinized by investors for clues on when the Fed will begin possible tapering off its $85 billion monthly bond purchases. "I would not expect any big positioning ahead of the non-farm payrolls as most investors are just in wait-and-see mode," Deutsche Bank precious metals trader Michael Blumenroth said. "But there is room for disappointment if the numbers are not as high as the market expects (market consensus is around 170,000) and for that I think in the short term gold prices are more likely to test higher levels towards $1,425." Spot gold was down 0.2 percent at $1,410.75 an ounce by 1136 GMT. U.S. gold futures for August delivery fell 0.4 percent at $1,410.50 an ounce. U.S economic data has been in the spotlight since Federal Reserve Chairman Ben Bernanke said last month the central bank's decision to taper off monetary stimulus would be taken "in the next few meetings" depending on whether the U.S. housing and job markets showed continued strengthening. But a top U.S. central bank official said on Thursday investors may have over reacted recently to the possibility of the Fed winding down its monetary easing. "The housing and labour markets are not very strong yet. The Fed has to keep in mind the impact on stock markets as well," GoldSilver managing director Central Brian Lan said. The dollar hovered near a 3-1/2 month low against a basket of currencies, while European shares steadied around six-week lows hit in the previous session ahead of the U.S. data. Gold is heading for a weekly gain of around 1.7 percent, after recovering from a loss early in the week on fears of slowing demand in India. The Reserve Bank of India extended restrictions on loans against security of gold coins per customer to all co-operative banks. This came after the world's largest bullion consuming country announced another increase in its import duty for gold earlier this week, in an attempt to curb gold imports to reduce its current account deficit. Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.3 percent to 1,007.74 tonnes on Thursday, as outflows resumed after holding steady for nearly a week. Holdings are at four-year lows. Silver was little changed at $22.58 an ounce, while palladium fell 0.3 percent to $756.22 an ounce. Platinum rose to a two-month high at $1,537.75 an ounce, supported by continued supply disruptions in the world's largest platinum supplier South Africa, before retreating to $1,523.99, down 0.2 percent. (Additional reporting by A. Ananthalakshmi in Singapore; editing by William Hardy)

Source