* Activity thin ahead of U.S. payrolls data
* SPDR Gold holdings <XAUEXT-NYS-TT> steady
By Miho Yoshikawa
TOKYO, Oct 2 (Reuters) - Gold inched back up to hover near
$1,000 on Friday ahead of the release of key U.S. employment data
expected to provide direction for currency markets, currently the
main driver for precious metals.
If non-farm payrolls come in weaker than the expected 180,000
job losses, it could renew fears about recovery in the world's
largest economy and bolster the dollar, seen as a safe haven.
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Gold is often viewed as an alternative to holding the dollar
and benefits from weakness in the U.S. currency, which makes it
more affordable for those buying in other currencies.
Gold <XAU=> was at $999.85 an ounce at 0538 GMT, up 0.1
percent from the notional close in New York of $998.50.
U.S. gold futures for December delivery <GCZ9> were at $1,001
an ounce, virtually unchanged from $1,000.7 on the COMEX division
of the New York Mercantile Exchange.
After gold's 8.7 percent rise in the three months to
September, its strongest performance since the first quarter of
2008, it was unclear whether the precious metal would make a
sustained rise to test the record high $1,030.80 per ounce set in
March 2008.
"After the sell-off last week it's struggling to gain
traction above $1,000, and as we've seen it get back and then dip
twice now," said Darren Heathcote, head of trading at Investec
Australia in Sydney.
He said, however, that there was fundamentally sufficient
support on the downside from rising oil prices, which fans fears
of inflation, and the sluggish state of the U.S. economy.
"Ultimately support is probably going to come around $985 on
the bottom," Heathcote said.
Others said there was insufficient support for gold from the
physical side.
"Supply and demand fundamentals are capping the gold price.
Scrap is becoming more available and jewellery demand goes down
every time the price goes up," said Tony Parry, a gold analyst at
Sydney-based Resource Capital Research.
He added: "The first quarter crisis-driven demand for
gold-backed ETFs almost evaporated in the second quarter with an
88 percent fall in funds flow into ETFs."
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said its holdings stood at 1,095.327
tonnes on Oct. 1, unchanged from the previous business day.
[]
"We expect trading in the $950-$1,000 band over the next six
months, with more risk of a sustained break below $950 than above
$1,000," Parry said.
The U.S. dollar retained broad gains on Friday as investors
cut short positions and booked profits in higher-yielding
currencies ahead of the U.S. payrolls report. []
PRICES
Precious metals prices at 0538 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 999.95 1.45 +0.15 13.61
Spot Silver 16.30 -0.02 -0.12 43.99
Spot Platinum 1279.00 1.50 +0.12 37.23
Spot Palladium 288.50 1.00 +0.35 56.37
TOCOM Gold 2886.00 -33.00 -1.13 12.16 26044
TOCOM Platinum 3688.00 -43.00 -1.15 39.06 7220
TOCOM Silver 468.30 -10.70 -2.23 46.66 340
TOCOM Palladium 837.00 -13.00 -1.53 52.18 228
Euro/Dollar 1.4541
Dollar/Yen 89.40
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Additional reporting by James Regan in Sydney and Chikako Mogi
in Tokyo; Editing by Hugh Lawson)
