* Dollar-gold relationship tentatively returns to normal
* Coming up: U.S. non-farm payrolls data, due 1230 GMT
* SPDR gold ETF rises; iShares silver ETF sees 30-T outflow
(Updates prices)
By Jan Harvey
LONDON, Aug 6 (Reuters) - Gold prices held just below $1,200
an ounce in Europe on Friday, little changed from the previous
session, as the dollar stayed in a holding pattern ahead of
hotly awaited U.S. non-farm payrolls data later in the day.
Spot gold <XAU=> was bid at $1,194.75 an ounce at 1152 GMT,
against $1,193.10 late in New York on Thursday. U.S. gold
futures for December delivery <GCZ0> eased $2.40 to $1,196.90.
Payrolls data due at 1230 GMT is expected to show U.S.
employment fell for a second month in July. A poll of 75
economists forecast payrolls slipped 65,000 after dropping
125,000 in June. []
The data is likely to impact the dollar and risk appetite in
the wider markets. Gold, which can be bought as a haven from
volatility in other markets, often benefits from heightened risk
aversion.
"Very positive data could be negative for gold, but the
dollar relationship (is key)," said RBS analyst Daniel Major.
Traditionally, gold and the dollar trade inversely, with
weakness in the U.S. unit lifting gold's appeal as an
alternative asset and making dollar-priced commodities cheaper
for holders of other currencies.
That relationship broke down earlier this year as both gold
and the dollar benefitted from risk aversion.
"We saw that negative correlation shift to a positive
correlation between the dollar and gold since January, up until
the last few weeks," said Major. "Gold is going to fall back
more into its traditional relationship with the dollar."
The U.S. unit held near a 3-1/2-month low versus a currency
basket ahead of the data, which is expected to underline the
fragility of the labour market. Currency and gold traders
steered clear of big positions before the numbers. []
"A violent breach of $1,200 is likely to depend on how close
to expectations the payrolls are," said VTB Capital in a note.
"It would be primarily driven by the investor community seeking
to protect themselves against economic headwind in addition to
some short covering."
"A very negative number would send gold rallying, otherwise
we could stall here and see a pullback to $1,180," it added.
FED EYED
A Federal Reserve monetary policy meeting next week is also
in focus, as a spate of weak economic data has strengthened the
argument the Fed may have to take further steps to boost the
economy.
"A poor number today will intensify market perceptions that
the Federal Reserve will look to introduce further stimulus
measures next week at its next policy meeting," said CMC Markets
analyst Michael Hewson in a note.
Among other commodities, crude prices held below $82 a
barrel as investors awaited the data to gauge the demand outlook
from the world's biggest oil consumer, while wheat prices
extended this week's stellar gains to 25 percent. [] []
Physical gold demand remained firm in India, with a stronger
rupee cushioning local buyers from the impact of rising dollar
prices. Buying is expected to continue ahead of a festival
season starting with Raksha Bandhan on Aug. 24 and continuing
until Dhanteras in November. []
Recent outflows from gold exchange-traded funds also seemed
to have stalled on Thursday, with holdings of the largest, New
York's SPDR Gold Trust <GLD>, rising for the first time since
mid-July. []
Silver <XAG=> was little changed, in line with gold, at
$18.30 versus $18.31. Data showed holdings of the world's
largest silver ETF, the iShares Silver Trust <SLV>, fell more
than 30 tonnes to 9,151.03 tonnes on Thursday. []
Elsewhere platinum <XPT=> was at $1,563 an ounce against
$1,566.75 and palladium <XPD=> at $486.50 versus $492.20.
(Reporting by Jan Harvey; Editing by Anthony Barker)
