* 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 to market close)
By Frank Tang
NEW YORK, Oct 8 (Reuters) - Gold rebounded 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 stimulate
the economy.
It was the fourth consecutive weekly rise for both gold and
silver. For the week, silver was up 5 percent, outperforming
gold's 2 percent rise.
A U.S. Labor Department report showed the U.S. economy shed
jobs in September for the fourth month in a row 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 growth through what is
known as quantitative easing, or QE2 as the market calls it.
"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 0.9 percent at $1,344.35 an ounce
at 2:58 p.m. EDT (1858 GMT) , after peaking at $1,349.70 an
ounce in earlier trade.
U.S. gold futures for December delivery <GCZ0> settled up
$10.30 an ounce at $1,345.30. Final volume was about 195,000
lots, 50 percent above its 30-day average, preliminary Reuters
data showed. COMEX gold open interest eased but held near a
record high 621,941 lots as of Wednesday.
Gold prices were choppy early, hitting a session low of
$1,324.85 an ounce after St. Louis Fed chief James Bullard said
policy makers face a tough decision at next month's meeting.
[]
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. []
The dollar fell 7.5 percent last month versus the euro, its
biggest monthly decline since December of 2008.
SOME BRACE FOR CORRECTION TO RALLY
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 dollar depreciation. (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.
Hansen said a resilient dollar may yet keep gold from rising
too high. []
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.
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.
Among other precious metals, silver <XAG=> surged 2.8
percent to $23.15 an ounce, near Thursday's 30-year high of
$23.51 an ounce.
Platinum <XPT=> rose 0.5 percent to $1,699.50 an ounce,
while palladium <XPD=> climbed 0.9 percent to $584.50.
Additional reporting by Jan Harvey in London
Prices at 2:59 p.m. EDT (1859 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1345.30 10.30 0.8% 22.7%
US silver <SIZ0> 23.105 0.521 0.0% 37.2%
US platinum <PLF1> 1708.70 3.70 0.2% 16.2%
US palladium <PAZ0> 587.60 0.50 0.1% 43.7%
Gold <XAU=> 1344.30 11.65 0.9% 22.6%
Silver <XAG=> 23.14 0.62 2.8% 37.4%
Platinum <XPT=> 1700.50 8.90 0.5% 16.0%
Palladium <XPD=> 583.00 3.85 0.7% 43.8%
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%
(Editing by Alden Bentley)
