* Euro recovers earlier losses to rise versus the dollar
* Report shows U.S. lost fewer jobs than expected in Feb
* Oil prices rise to 7-week high after U.S. payrolls data
* Palladium prices rise towards 2010 high
(Updates prices, adds comment)
By Jan Harvey
LONDON, March 5 (Reuters) - Gold rose towards $1,140 an
ounce on Thursday as the dollar weakened against the euro, and
as investors took advantage of the metal's brief price fall in
the wake of U.S. jobs data to buy the precious metal.
The metal hit a session low of $1,126.60 an ounce after
better than expected payrolls data lifted the dollar, but
quickly bounced back on bargain hunting and the euro recovered
its initial losses.
A rise in oil prices to seven-week highs also helped gold.
Spot gold <XAU=> was bid at $1,138.40 an ounce at 1545 GMT,
against $1,131.45 late in New York on Thursday. U.S. gold
futures for April delivery <GCJ0> on the COMEX division of the
New York Mercantile Exchange rose $6.10 to $1,139.20 an ounce.
"The better-than-expected non-farm payrolls initially took
(gold) lower as the market moved in tandem with the stronger
dollar," said Saxo Bank senior manager Ole Hansen.
"The lows from yesterday held and it looks like the upside
momentum is still intact," he added. "The view among many is
still that they worry about missing the boat and there has been
buying into the break through $1,131."
The hotly-anticipated payrolls report showed U.S. employers
cut a smaller-than-expected 36,000 jobs in February, leaving
investors hopeful that the labour market was on the brink of
creating jobs. The unemployment rate was steady at 9.7 percent
The dollar initially rallied on the news as optimism over
the prospects for an economic recovery was boosted, but the euro
<EUR=> quickly bounced off its session low of $1.3529.
It was later trading up 0.2 percent against the dollar.
Analysts are optimistic that gold will stay firm in the
medium term, boosted by instability in the currency markets,
concern over sovereign debt, persistently low interest rates and
prospects for inflation later this year and into 2011.
Appetite for physical gold in key markets such as India and
Turkey is also showing signs of recovery after coming under
pressure in 2009 as prices rose to record levels.
OIL HITS 7-WEEK HIGH
Among other commodities, crude oil climbed more than 1
percent to a seven-week high above $81 a barrel after the U.S.
jobs data and on signals China will maintain its economic
stimulus measures. []
Gold tends to track crude prices, as the metal can be bought
as a hedge against oil-led inflation.
Among other precious metals, silver <XAG=> was bid at $17.41
an ounce against $17.10, tracking gains in gold.
The world's largest silver-backed exchange-traded fund, the
iShares Silver Trust <SLV>, said its holdings fell 61.02 tonnes
from a day before to 9,412.43 tonnes on March 4. []
Platinum <XPT=> was at $1,581.50 an ounce against $1,576.50,
while palladium <XPD=> was at $471 against $458.50, close to its
2010 high of $471.75 an ounce, set in January.
Palladium has outperformed other precious metals this year,
rising 14 percent compared with a 7.3 percent rise for platinum,
3.5 percent for gold and 2.4 percent for silver.
"Palladium prices were notably strong, supported by spread
trading between platinum and palladium," said HSBC in a note.
"This is based in part on recent auto sales improvement
regions that are more reliant on gasoline engines -- i.e. North
America and China -- as compared to diesel engines, which are
predominantly sold in Europe."
For a table showing Chinese car and vehicle sales in
February, click on [].
Gasoline-powered vehicles use a greater percentage of
palladium and less platinum than diesel engines, which require
more platinum and less palladium.
(Editing by Sue Thomas)
