(recasts, adds quotes, changes prices, pvs SINGAPORE)
By Atul Prakash
LONDON, April 2 (Reuters) - Gold rebounded to gain more than
1 percent on Wednesday after hitting two-month lows in the
previous session as firmer oil and a slightly weaker dollar
against the euro prompted investors to snap up the metal.
But analysts said the broad commodities sell-off in recent
days had damaged near-term sentiment and bullion investors would
be cautious in chasing the metal higher ahead of U.S. payrolls
data on Friday that could influence the dollar.
"We are trying to recover some ground and may succeed
depending on the data releases in the U.S., but that could be
temporary respite," said Tom Kendall, metals strategist at
Mitsubishi Corporation.
"It's too early to be wholly convinced that the time is
right to go long again for strategic investors. The market needs
to steady for a while and it's possible that we will set up a
range here between $875 to $900 for a week or two."
Gold <XAU=> hit a high of $894 and was at $891.50/892.40 an
ounce at 1021 GMT, up from $884.20/885.40 late in New York on
Tuesday, when it fell as low as $872.90.
A decline of 3 percent on Tuesday took overall losses to
15 percent since gold hit a record high of $1,030.80 last month,
making bullion attractive for physical dealers.
The dollar marginally fell against the euro, but held most
of the gains made on Tuesday as traders saw news that some
struggling financial firms had shored up their balance sheets as
a sign the worst of the global credit crisis may be over.
The U.S. currency followed a climb in share prices around
the world after Lehman Brothers Holdings <LEH.N> raised $4
billion of capital on Tuesday, quelling some speculation that
the investment bank may be in trouble. []
A weaker dollar makes gold cheaper for holders of other
currencies and often lifts bullion demand. The metal is also
generally seen as a hedge against oil-led inflation.
Oil prices rose above $101 a barrel, snapping three-straight
days of losses triggered by dollar gains and easing supply
concerns in Iraq.
JOBS DATA AWAITED
Investors awaited data on U.S. employment on Friday, which
are likely to show continuing weakness in the job market,
suggesting that the economy is still struggling.
"Market participants are likely to be cautious ahead of
Friday's non-farm payroll data release ... This figure has been
a real market-mover over the past few months," Standard Bank
said in a market report.
Analysts said weaker jobs figures could further fuel the
argument for more interest rate cuts by the Federal Reserve,
which has already slashed rates by 300 basis points since autumn
to 2.25 percent.
"Prices have bounced this morning on expectations that the
U.S. may hint at further rate cuts. Lower prices are encouraging
physical demand, particularly in Asia," Fairfax investment bank
said in a daily market report.
A rate cut tends to weaken the dollar and helps gold prices.
In other precious metals markets, U.S. gold futures for June
delivery <GCM8> on the COMEX division of the New York Mercantile
Exchange rose $7.8 an ounce to $895.60.
Spot platinum <XPT=> rose 1.6 percent to $1,948/1,958 an
ounce from $1,918/1,928 on Tuesday, when it fell to a low of
$1,888. Silver <XAG=> rose to $17.03/17.08 from $16.81/16.86 an
ounce on Tuesday, when it hit a two-month low of $16.32.
Palladium <XPD=> rose $2 to $437/442 an ounce.
(Reporting by Atul Prakash; editing by Elizabeth Piper)
