* Gold, silver rally to highest since June on risk aversion
* Dollar weakness adds to technical momentum
* Implats says some striking workers return to work
(Updates throughout, changes dateline from TOKYO)
By Jan Harvey
LONDON, Sept 3 (Reuters) - Gold rallied to a fresh
three-month high in Europe on Thursday, extending the last
session's gains, as caution ahead of key U.S. non-farm payrolls
data sparked a flight to quality among investors.
The dollar index <.DXY>, which measures the U.S. unit's
performance against a basket of six major currencies, also
softened, lifting interest in the metal as an alternative asset.
Spot gold <XAU=> hit a high of $984.30 and was bid at
$982.40 an ounce at 0950 GMT, against $976.60 an ounce late in
New York on Wednesday.
The metal broke out of the $930-960 range it had stuck to
for much of August on Wednesday, as the metal's move through
technical resistance above $960 sparked a rally above $980.
Helen Henton, head of commodities at Standard Chartered,
said the strength of the move could suggest a single buyer,
possible an exchange-traded fund or central bank.
"The initial jump was to do with slight weakness in equity
markets (and) a little bit of risk aversion, but the size of the
jump implies that we had a big jump from a particular investor,"
she said.
"What is clear though is that investment demand for gold is
still very strong, and that is going to help drive the price
higher over time," she added. "We think it's going to break
$1,000 by Q4, mainly driven by a weakening U.S. dollar."
The market is awaited fresh clues on the economic outlook
from the U.S. August non-farm payrolls data on Friday. Investors
were spooked after a labour market report released on Wednesday
showed more private sector job losses than expected.
VOLATILE PATTERN
European stocks fluctuated in early trade after Asian shares
edged up on Thursday. The equity markets have been trading in a
volatile pattern early this month. []
On the foreign exchange markets, the yen -- typically a
prime beneficiary when investors seek out assets seen as safe --
hit seven-week highs versus the dollar after the U.S. jobs data.
The dollar index weakened as the euro also firmed against
the U.S. currency. Gold often benefits from dollar weakness, as
it becomes cheaper for holders of other currencies. []
However, euro-priced gold's move to three-month highs of 688
euros an ounce on Thursday suggests its move is relatively
independent of the dollar, analysts said.
U.S. gold futures for December delivery <GCZ9> on the COMEX
division of the New York Mercantile Exchange rose $6 to $984.50.
Silver <XAG=> meanwhile tracked gold higher to reach its highest
since June at $15.70, and was later at $15.65 against $15.34.
It outpaced base metals such as copper, with which silver,
as an industrial as well as an investment metal, often moves.
"Silver has fully participated in this (rally) and yet while
base metals have picked up a bit in last 18 hours, they were
definitely on the defensive," said Stephen Briggs, an analyst at
RBS Global Banking & Markets.
"Silver has managed to ignore that, which is interesting."
Among other precious metals, platinum <XPT=> was at
$1,238.50 an ounce against $1,229, while palladium <XPD=> was at
$289 against $284.50.
Impala Platinum <XPT=>, the world's second largest miner of
the metal, said on Thursday some workers at its operations had
returned to work after a strike, but said no wage deal had been
agreed with the union. []
JPMorgan meanwhile recommended investors put their money
into platinum stocks, with a recovery in vehicle sales expected
to boost demand for the autocatalyst metal. []
(Additional reporting by Jane Grieve; Editing by Anthony
Barker)
