* Gold option market signals possible upward move
* Selling pressure seen from index rebalancing -JP Morgan
* Traders await non-farm payrolls data due Friday
(Recasts, updates with quotes, closing prices, adds NEW York
to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Jan 8 (Reuters) - Gold rose nearly 2
percent on Thursday in a rally sparked by a weaker dollar and a
bleak economic picture, and the option market signaled bullion
could rise further in the near term.
Investors in the COMEX gold option market were bracing for
higher gold prices in the near term, traders said.
"We have seen that the front-month (option contract) has
been firming up a lot, which is usually a good indication that
there is an upward move imminent," said Mihir Dange, a COMEX
gold floor trader.
The bullion market is now keenly awaiting key U.S. non-farm
payrolls data due on Friday. Any further sign of weakness in
the U.S. economy is likely to have a significant impact on the
dollar, and consequently on gold.
Spot gold <XAU=> was at $842.20 an ounce at 3:43 p.m. EST
(2043 GMT), up 1.6 percent from the last trade of $842.20 on
Wednesday.
U.S. gold futures for February delivery <GCG9> settled up
$12.80, or 1.5 percent, at $854.50 an ounce on the COMEX
division of the New York Mercantile Exchange.
Gold's subsequent break higher sparked a technical bounce,
analysts said.
"It looks like we get some support building in a $836 to
$865 range. Every time we get down into the mid $830s, it
bounces right up from there," Dange said.
Gold's strength on Thursday was largely driven by a lower
dollar, which was weakened as falling stocks worldwide and weak
sales at top U.S. retailer Wal-Mart reignited worries about the
global economic outlook. []
"The dollar has weakened, so in theory that should underpin
gold," Robin Bhar, a senior metals analyst at Calyon, said.
"People are waiting for tomorrow's non-farm numbers."
"The (Friday) jobs data is expected to be bad and that
would see an equities sell-off," he said.
FORECASTS
Commodity index rebalancing was expected to add selling
pressure to gold and live cattle but will benefit copper and
crude oil, analysts at U.S. brokerage J.P. Morgan said.
[]
The Dow Jones-AIG index <.DJAIG> will change its weights
from Jan. 9 to Jan. 15. Re-weighting the S&P GSCI index
<.SPGSCI> is underway from Jan. 8 to Jan. 14.
Goldcorp Inc <G.TO>, one of the world's largest gold
miners, said it expects to produce 2.3 million ounces of gold
in 2009, and that it will boost its gold production by 50
percent over the next five years. []
Meanwhile, Harmony Gold Mining <HARJ.J>, the world's
fifth-largest gold producer, said it sees gold rising to $900
an ounce this year, and that it expects to produce 1.6 million
ounces of the precious metal this year. []
HSBC said it is raising its 2009 and 2010 gold price
forecasts on expectations the faltering global economy will
prompt investors to buy into the metal as a haven from risk.
The bank raised its 2009 gold forecast to $825 an ounce
from $800, and its 2010 price view to $775 from $725, but left
its long-term forecast at $700.
The bank cut its 2009 price view for platinum by 15
percent, however. It sees demand falling as the economic
slowdown hits industrial users of the white metal, such as
carmakers.
Spot platinum <XPT=> was quoted at $989.00 an ounce, 1.7
percent higher than its last finish of $972.50 on Wednesday.
The metal has held firm this week despite a spate of bad news
from carmakers, the main buyers of platinum.
Among other precious metals, silver <XAG=> was quoted at
$11.09 an ounce, up 0.7 percent from its previous session close
of $11.01, while palladium <XPD=> was quoted at $194.00 an
ounce, 0.5 percent lower compared with its previous close of
$195.
(Additional reporting by Michael Taylor; Editing by Marguerita
Choy)
