* Gold turns higher after nonfarm payrolls showed decline
* Bullion supported by view Fed monetary easing imminent
* SPDR gold ETF sees biggest one-day outflow since July
* Coming up: IMF, World Bank's annual meeting over weekend
(Recasts, updates prices, market activity; adds second
byline/dateline, previously LONDON)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Oct 8 (Reuters) - Gold rose 1 percent on
Friday, a day after a sharp retreat, as a weak U.S. employment
report spurred buying by investors who expect the Federal
Reserve will start buying government debt again to boost the
economy.
Gold and silver were on track for a fourth straight weekly
rise.
A U.S. Labor Department report showed the U.S. economy shed
jobs in September for a fourth straight month as government
payrolls fell and private hiring slowed. []
Miguel Perez-Santalla, vice president of sales at Heraeus
Precious Metals Management, said that the weak jobs data should
push the Fed toward trying to stimulate the economy through
purchases of government debt, or quantitative easing.
"Quantitative easing means more money in the system. With
that, there's going to be possible market devaluation. And as
the currencies lose value, how do you protect against that? A
lot of people are looking into gold," he said.
Spot gold <XAU=> was up 1 percent at $1,345.40 an ounce at
12:26 p.m. EDT (1626 GMT) after hitting a session high of
$1,349.70. U.S. gold futures for December delivery <GCZ0> rose
$11.60 an ounce to $1,346.60.
The Reuters-Jefferies CRB index, a global commodities
benchmark, hit two-year highs as U.S grains and oil markets led
a broad commodities rally, while the dollar slipped to new lows
against a basket of major currencies. []
Many investors believe the jobs numbers make it much more
likely that the Fed will start another round of quantitative
easing -- dubbed "QE2" by financial professionals -- which
would feed inflation fears and boost gold.
"A weak number equals increased likelihood of QE2, equals
higher gold prices," said Saxo Bank senior manager Ole Hansen.
The dollar fell 7.5 percent last month versus the euro, its
biggest monthly decline since December, 2008.
Gold has rallied about 10 percent since the end of August.
It hit a record high on Thursday of $1,364.60 an ounce before
finishing lower for the day. The precious metal is viewed as a
hedge against inflation and a weaker dollar. (Graphic:
http://r.reuters.com/kaf27p)
Some investors thought gold's sharp drop on Thursday after
hitting a record high might signal the start of a correction in
the latest rally. Hansen said a resilient dollar may yet keep
gold from rising too high. []
He said it "still feels like this correction may not have
fully run its course, but the dollar will decide in the end."
Gold prices were choppy early, falling below $1,330 an
ounce after St. Louis Fed chief James Bullard said policy
makers face a tough decision at next month's meeting.
[]
Gold investors are also waiting to see how this weekend's
annual meeting of the International Monetary Fund and World
Bank will affect foreign exchange markets.
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. []
Commerzbank wrote in a note that the outflows from gold
ETFs signal that short-term speculators caused the latest swift
rise in gold prices.
Nonetheless, some technical analysts called for a
correction to the record-breaking rally, after gold charts
showed an outside-day on Thursday, a price pattern in which the
day's range exceeds the previous high and low, and is
considered a technical warning sign of a reversal.
Among other precious metals, silver <XAG=> surged 3.1
percent to $23.21 an ounce, near Thursday's 30-year high of
$23.51 an ounce.
Platinum <XPT=> rose 0.7 percent to $1,703 an ounce, while
palladium <XPD=> climbed 1 percent to $585.
Prices at 12:39 p.m. EDT (1639 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCZ0> 1346.50 11.50 0.9% 22.8%
US silver <SIZ0> 23.240 0.656 2.9% 38.0%
US platinum <PLF1> 1708.50 3.50 0.2% 16.1%
US palladium <PAZ0> 586.00 -1.10 -0.2% 43.3%
Gold <XAU=> 1345.10 12.45 0.9% 22.7%
Silver <XAG=> 23.22 0.70 3.1% 37.9%
Platinum <XPT=> 1701.00 9.40 0.6% 16.1%
Palladium <XPD=> 585.00 5.85 1.0% 44.3%
Gold Fix <XAUFIX=> 1341.50 11.00 0.8% 21.5%
Silver Fix <XAGFIX=> 22.37 -101.00 -4.3% 31.7%
Platinum Fix <XPTFIX=> 1683.00 5.00 0.3% 14.8%
Palladium Fix <XPDFIX=> 572.00 3.00 0.5% 42.3%
(Reporting by Frank Tang; Editing by David Gregorio)
