* Gold set to rise 7 pct in July-Sept, up 4th quarter in row
* Some analysts see rally in Oct on a weakening dollar
* SPDR Gold holdings <XAUEXT-NYS-TT> unchanged since Thurs
By Risa Maeda
TOKYO, Sept 30 (Reuters) - Gold firmed on Wednesday and was
poised to post its best quarterly performance since the first
quarter of 2008, helped by dollar weakness and technical
momentum.
Spot gold <XAU=> was at $996.30 per ounce at 0613 GMT, up 0.6
percent against the notional close in New York of $990.70,
supported by Wednesday's retreat in the greenback.
U.S. gold futures for December delivery <GCZ9> were at
$997.80 per ounce on the COMEX division of the New York
Mercantile Exchange, up 0.4 percent from Tuesday, when the
contract rose 30 cents.
Bullion is set to rise for the fourth quarter in a row in the
July-Sept period, climbing almost 8 percent and marking its
strongest performance since it gained 9.9 percent in the
January-March quarter of 2008.
It rallied to an 18-month high of $1,023.85 an ounce earlier
this month, just a few dollars shy of the March 2008 record peak
of $1,030.80.
It has since succumbed to profit-taking, with a dollar bounce
from a one-year low marked last week keeping bullion investors
largely on the sidelines.
Market players are awaiting the reaction of currency and
equity markets to U.S. private payrolls data for September due at
1215 GMT. The ADP estimate of private payrolls is viewed as a
preview to the U.S. Labour Deparments' monthly non-farm payrolls
report due this Friday.
Economists polled by Reuters estimated that the ADP national
employment report would show that payrolls shed 210,000 jobs in
September.
"Trading is rangebound. The focus is on the foreign exchange
market and U.S. payrolls data to be released tonight," said Leon
Lee, senior gold trader at Bank of China in Hong Kong.
In the currency market, the dollar fell 0.5 percent against a
basket of currencies <.DXY>. The euro rose 0.3 percent to $1.4630
<EUR=>, having climbed over 4 percent so far in July-September.
[]
There is little physical buying demand at current price
levels, Lee said, noting that further consolidation towards $980
per ounce would be needed to spur such buying.
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said its holdings stood at 1,094.107
tonnes on Tuesday, unchanged since Thursday. []
Looking ahead, some market pundits see signs of economic
growth undermining gold. []
But others say gold would soon regain its allure as a hedge
against a weakening dollar as the U.S. central bank will likely
maintain its easy grip on monetary policy to support the
financial system.
Koichiro Kamei, managing director at Market Strategy
Institute in Tokyo, said a further rally in global equity markets
seems unlikely as prices have factored in most of the bright
spots ahead. Instead, banks' weak quarterly earnings due to
rising bad loans as the economy stays fragile could increase
gold's appeal as a safe-haven asset.
"In October, earnings are likely to show the financial
conditions of banks are far from good enough to fix investor
confidence," Kamei said. "That means the Federal Reserve's easy
policy is unlikely to end any time soon, resulting in a weak
dollar, inflation woes and therefore, a buy for gold," he said.
Underlining vulnerability of the U.S. financial system, the
Federal Deposit Insurance Corp on Tuesday discussed how to
rebuild the bank deposit insurance fund, which has been depleted
by a sharp increase in bank failures.
The FDIC's five-member board proposed that banks repay three
years of fees to help cover the rising cost of bank failures.
[]
Precious metals prices at 0616 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 996.65 5.95 +0.60 13.24
Spot Silver 16.34 0.23 +1.43 44.35
Spot Platinum 1277.00 10.00 +0.79 37.02
Spot Palladium 287.00 2.00 +0.70 55.56
TOCOM Gold 2887.00 6.00 +0.21 12.20 33185
TOCOM Platinum 3690.00 -11.00 -0.30 39.14 8277
TOCOM Silver 470.50 2.20 +0.47 47.35 268
TOCOM Palladium 835.00 -5.00 -0.60 51.82 119
Euro/Dollar 1.4621
Dollar/Yen 89.75
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
