* Gold, silver rally to highest since June on risk aversion
* Dollar weakness adds to technical momentum
* Implats says some striking workers return to work
(Releads, updates prices)
By Jan Harvey
LONDON, Sept 3 (Reuters) - Gold rallied to a three-month
high in Europe on Thursday, building on the last session's
gains, as the dollar index extended losses and amid caution
ahead of key U.S. non-farm payrolls data on Friday.
Fears the data may point to a less rosy picture of the U.S.
economy sparked a flight to quality among investors on
Wednesday.
Spot gold <XAU=> hit a high of $987.30 and was bid at
$985.25 an ounce at 1156 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 a 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,
possibly 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 awaiting 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.
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VOLATILE PATTERN
The dollar index <.DXY>, which measures the U.S. unit's
performance against a basket of six major currencies, also
softened on Thursday, boosting interest in the metal as an
alternative asset. []
Gold also becomes cheaper for holders of other currencies as
the U.S. unit slips.
The euro rose against the dollar as traders awaited a
European Central Bank announcement later in the session, after
the bank opted to keep interest rates at 1.0 percent.
[]
On the wider markets, European stocks gained after
fluctuating in early trade after Asian shares edged up on
Thursday. The equity markets have been trading in a volatile
pattern. []
U.S. gold futures for December delivery <GCZ9> on the COMEX
division of the New York Mercantile Exchange rose $8.40 to
$986.90. Silver <XAG=> tracked gold higher to reach its highest
since June at $15.82, and was later at $15.75 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 the 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 $1,240
an ounce against $1,229, while palladium <XPD=> was at $291
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. []
(Additional reporting by Jane Grieve; Editing by Sue Thomas)
