(Recasts, updates with analyst comment, closing prices, market
activity, adds NEW YORK to dateline)
By Frank Tang and Atul Prakash
NEW YORK/LONDON, May 2 (Reuters) - Gold ended higher on
Friday, recovering from an initial four-month low, with
analysts expecting future volatility to be driven by gyrations
in the greenback and possible fund sales.
Spot gold <XAU=> fell as low as $845 an ounce after the
dollar jumped following better-than-expected U.S. jobs data,
but the metal rebounded when the price dipped below $850 an
ounce and attracted fresh buyers, analysts said.
It was at $855.80/857.00 by New York's last quote at 2:15
p.m. EDT (1815 GMT) against $850.25/851.65 in New York late on
Thursday.
"It will stay very volatile for sure and we need to have our
eyes on the forex market so when the dollar is able to recover
more, $800 is probably the next target on the gold side," said
Michael Kempinski, senior precious metals trader at
Commerzbank.
"I think the physical off-take is not enough to absorb all
the selling which is coming out of the funds which still have
massive long positions," he said.
The dollar jumped to two-month highs versus a basket of
major currencies after data showed the U.S. economy lost just
20,000 jobs in April, fewer than economists had forecast.
[]
The U.S. jobs report bolstered expectations that the Federal
Reserve may be nearing the end of its rate-cutting cycle and
backed a growing view that the U.S. economic slowdown may not be
as deep as some originally thought. []
A firmer dollar makes gold costlier for holders of other
currencies and often lowers bullion demand. The metal is also
generally seen as a hedge against oil-led inflation.
Oil <CLc1> rebounded after three straight days of falls,
drawing support from the U.S. data. U.S. crude futures ended up
$3.80 at $116.32 a barrel.
GOLD LOSES 'FLAVOUR'
Some analysts expected the gold market to hold above the
$850 level.
George Nickas, broker with FC Stone in New York, said that
longer-term traders still believed that holding long positions
in gold was the best strategy given gold's positive market
fundamentals.
"The short-term down trend might be coming to an end,"
Nickas said.
Wolfgang Wrzesniok-Rossbach, head of sales at Heraeus, a
German precious metals trading group, said that if gold broke
down convincingly, the whole precious metals complex might go
down further.
"People are perhaps looking elsewhere, such as equities. It
seems gold is not the flavour of the day."
Gold held in New York-listed StreetTRACKS Gold Shares
<XAUEXT-NYS-TT>, the world's largest gold-backed exchange-traded
fund, has fallen to 580.45 tonnes, shedding nearly 10 percent of
its holdings in the last 10 days.
In other markets, U.S. gold futures for June delivery
<GCM8> on COMEX division of New York Mercantile Exchange
settled up $7.10 at $858.00 an ounce.
Platinum <XPT=> was at $1,888/1,908 an ounce from
$1,860.50/1,880.50 late on Thursday, while palladium <XPD=> was
up at $413.50/421.50 an ounce, against its previous close of
$406/414 an ounce. Silver <XAG=> rose to 16.37/16.43 an ounce
from $16.16/16.22 late in the U.S. market.
(Additional reporting by Tamora Vidaillet in London, editing by
Matthew Lewis)
