* U.S. non-farm payrolls data broadly meet expectation
* Violence continues to simmer in Libya, supporting gold
* Mkt digests implications of possible euro zone rate hike
* Silver rises to 31-year high on gold's coat-tails
(Updates prices)
By Jan Harvey
LONDON, March 4 (Reuters) - Gold rose above $1,430 an ounce
on Friday as fresh violence flared in Libya, and after U.S.
February payrolls data supported expectations the Federal
Reserve will hold off tightening monetary policy.
Gains in gold also lifted silver prices, which climbed to
their highest since early 1980 at $35.32 an ounce.
Spot gold <XAU=> hit a high of $1,431.20 an ounce and was
bid at $1,428.75 at 1536 GMT, against $1,415.59 late in New York
on Thursday. Prices fixed at $1,427 at 1500 GMT. U.S. gold
futures for April delivery <GCJ1> rose $13.30 to $1,429.70.
The U.S. Labor Department said non-farm payrolls increased
by 192,000 in February, above market expectations for 185,000
jobs. Data for December and January was revised to show 58,000
more jobs created than previously estimated. []
While the numbers beat Reuters forecasts, many in the market
had privately expected a still stronger number, leading to
initial weakness in equities and the dollar. [] []
"Overall they indicate what Fed Chairman Bernanke already
pointed out in his two testimonies this week," said Peter
Fertig, a consultant at Quantitative Commodity Research.
"The economy is improving, growth could surprise on the
upside, but the economic recovery is not producing new jobs as
it has in the past, given those growth rates.
"Thus there is no indication from this labour market report
that the Fed might think about terminating quantitative easing
earlier than scheduled. That will be continued, and that is
going to be a supportive factor (for gold)," he said.
The Fed's easy monetary policy, in place since the financial
crisis rocked the markets from 2008, has been a major reason for
gold's rally to record highs, because it has undermined
confidence in paper currencies.
Comments from the European Central Bank on Thursday that
stoked expectation euro zone monetary policy would tighten
sooner rather than later had knocked gold sharply lower.
VIOLENCE FLARES
Gold prices hit a record high at $1,440.10 an ounce on
Wednesday as violence flared in Libya after weeks of unrest in
the region. While they have since corrected, unrest in Libya in
particular is continuing to support gold.
Forces loyal to Muammar Gaddafi widened attacks on
rebel-held areas in an escalation of Libya's crisis on Friday
and violence spread to the capital when gunmen opened fire to
break up dissident protests. []
"Ongoing speculation that the conflict in Libya might come
to an end weighed heavily on precious metals in yesterday's
trade," said Standard Bank in a note.
"This pressure has since faded on news of renewed attacks by
Gaddafi forces and the outright rejection by opposition leaders
of mediation offers from Venezuelan President, Chavez and the
Arab league," it added.
"With oil once again tracking higher, precious metals should
follow suit on both safe-haven demand and inflation hedging."
U.S. crude futures extended gains, hitting fresh 2-1/2 year
highs, as clashes between pro- and anti-Gaddafi fighters
intensified in Libya. []
Interest in investment products such as gold-backed
exchange-traded funds slackened, meanwhile. Holdings of the
world's largest, New York's SPDR Gold Trust <GLD>, fell to their
lowest since mid-May on Thursday at 1,210.621 tonnes. []
Holdings in the world's largest silver ETF, the iShares
Silver Trust <SLV>, rose to 10,794.89 tonnes by March 3, their
highest since early January. []
Spot silver <XAG=> was bid at $35.26 an ounce against
$34.17. Among other precious metals, platinum <XPT=> was at
$1,836.74 an ounce against $1,823.49, while palladium <XPD=> was
at $816.22 against $812.
(Reporting by Jan Harvey; Editing by Jane Baird and Keiron
Henderson)
