* Gold retreats from record high as dollar recovers
* SPDR gold ETF sees biggest one-day outflow in July
* Coming up: U.S. Sept. non-farm payrolls data at 1230 GMT
(Updates throughout, previous SINGAPORE)
By Jan Harvey
LONDON, Oct 8 (Reuters) - Gold steadied on Friday,
consolidating after the previous day's volatile trading saw it
hit record highs before staging its biggest daily loss in two
months, as investors took to the sidelines ahead of key U.S.
payrolls data.
The foreign exchange markets, which have a significant
impact on gold, are also awaiting the annual meeting of the
International Monetary Fund and World Bank this weekend, which
is expected to give fresh direction to currencies next week.
Spot gold <XAU=> was bid at $1,332.25 an ounce at 0924 GMT,
against $1,332.65 late in New York on Thursday. U.S. gold
futures for December delivery <GCZ0> fell $1.90 to $1,333.10.
"We will pause ahead of non-farm payrolls," said Andrey
Kryuchenkov, an analyst at VTB Capital. "The greenback is
holding up... the market is in wait-and-see mode."
Trading was choppy on Thursday, with prices rising to a
record $1,364.60 an ounce in early trade before slipping sharply
as the dollar recovered mid-afternoon, and after miner AngloGold
Ashanti <ANGJ.J> said it had eliminated its hedge book.
"A correction was to be expected, but in the long run the
market is still relatively well supported," said Kryuchenkov. He
said while some profit taking was to be expected, caution
remained as investors pondered "QE2 and the Fed's next move."
The dollar held steady on Friday, recovering from a sell-off
earlier this week. The U.S. currency has been dogged in recent
weeks by expectations that the Federal Reserve will move towards
further quantitative easing in the months to come. []
The U.S. unit fell 7.5 percent last month versus the euro,
its worst monthly performance versus the single currency since
Dec. 2008, and has hit its lowest since January.
"The event risk of non-farm payrolls today feels especially
acute," said Credit Agricole in a note. "We have seen a big
sell-off in the USD, and the vulnerability of the bears to some
upside surprise on the release must be rather pronounced.
"But it is also quite likely that the U.S. dollar response
to some drastically poor number would also be sizeable, helping
to quell any lingering doubts about the likelihood of further QE
by the Fed."
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For Reuters' U.S. non-farm payrolls preview, click on:
http://link.reuters.com/nem47p
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GOLD ETF HOLDINGS DROP
Meanwhile the world's largest gold-backed exchange-traded
fund, New York's SPDR Gold Trust <GLD>, reported a 13.4 tonne
outflow on Thursday, the biggest one-day drop in its holdings
since late July. []
"It is striking that this price fall was accompanied by high
outflows from the SPDR Gold Trust," said Commerzbank in a note.
"Investors are clearly taking profits as prices fall."
"This is a sign, in our view, that the air gets more and
more thin at the current price level, and it also shows that the
swift rise in prices is probably largely due to short-term
oriented financial investors."
Nonetheless, technical analysts say gold is well-positioned
to extend its current record highs to new levels, although a
short-term correction may be seen to settle prices at higher
levels. []
Among other precious metals, silver <XAG=> edged up to
$22.55 an ounce from $22.52, though it remained well off the
previous day's 30-year high of $23.51 an ounce.
Holdings of the world's biggest silver-backed ETF, the
iShares Silver Trust <SLV>, climbed to a record 9,997.39 tonnes
on Thursday, reflecting strong investor demand for the metal.
Elsewhere platinum <XPT=> was at $1,686 an ounce against
$1,691.60, while palladium <XPD=> was at $576 against $579.15.
Investment firm Castlestone Management told Reuters in an
interview on Friday that platinum offers a better bet for
investors long-term than gold. []
(Editing by James Jukwey)
