* Gold reverses earlier losses as U.S. data hurts dollar
* SPDR gold ETF sees biggest one-day outflow since July
* Coming up: annual meeting of the IMF, World Bank
(Updates prices)
By Jan Harvey
LONDON, Oct 8 (Reuters) - Gold prices climbed, reversing
earlier losses to hit session highs above $1,345 an ounce, after
U.S. non-farm payrolls data for September came in much weaker
than expected, pressuring the dollar against the euro.
Spot gold <XAU=> hit a peak of $1,346.30 and was at
$1,343.50 an ounce by 1453 GMT, against $1,332.65 late in New
York on Thursday. U.S. gold futures for December delivery <GCZ0>
rose $9.90 an ounce to $1,344.90.
The payrolls numbers, which showed U.S. employers shed
95,000 jobs last month against expectations for none to be lost,
have cemented expectations the Federal Reserve may move towards
further measures to stimulate the flagging U.S. economy.
"A weak number equals increased likelihood of QE2, equals
higher gold prices," said Saxo Bank senior manager Ole Hansen.
"If we can move back above $1,340 today, it looks good heading
into next week."
However, the dollar's resilience to the data -- it quickly
recovered from lows versus the euro -- may prove a significant
barrier to fresh strength in the metal, Hansen added. []
"(It) still feels like this correction may not have fully
run its course, but the dollar will decide in the end," he said.
Gold's near-10 percent rally from end-August to Thursday's
record high at $1,364.60 an ounce had come largely on the back
of expectations for further U.S. quantitative easing, which
knocked the dollar 7.5 percent lower last month versus the euro,
its worst monthly performance since Dec. 2008.
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For a graphic showing expectations for quantitative easing to
lift gold, click on: http://r.reuters.com/kaf27p
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Gold prices were choppy in early Friday trade, falling below
$1,330 an ounce after a Federal Reserve official was quoted as
saying the pursuit of further U.S. monetary easing was a "tough
call", before moving higher after the payrolls report.
Investors are now awaiting news from an annual meeting of
the International Monetary Fund and World Bank this weekend for
its impact on the foreign exchange markets, which in turn will
have a significant impact on gold.
GOLD ETF HOLDINGS DROP
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 (yesterday's) 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," he said.
Nonetheless, technical analysts say gold is well-positioned
to extend its recent 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=> was at $23.08 an
ounce against $22.52, 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.
Platinum <XPT=> was at $1,705 an ounce against $1,691.60,
while palladium <XPD=> was at $587.50 versus $579.15.
Investment firm Castlestone Management told Reuters in an
interview on Friday platinum offered a better bet for investors
long-term than gold. []
(Editing by Sue Thomas)
