* Traders eye U.S. non-farm payrolls data due 1330 GMT
* Monetary easing, asset volatility boosts safe-haven demand
* SPDR Gold Trust holdings hit fresh record
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Feb 6 (Reuters) - Gold was steady in Europe on
Friday as traders took to the sidelines ahead of key U.S. jobs
data later in the session, though fresh inflows into the world's
biggest exchange-traded fund showed strong investor demand.
Spot gold <XAU=> was at $912.50/914.50 an ounce at 1011 GMT,
against $913.75 late in New York on Wednesday.
Gold is benefiting from a flight to safety among fund
investors spooked by volatility in other asset prices. Falling
interest rates around the world are also reducing the
opportunity cost of holding bullion.
"When you have central banks reducing the cost of money, it
makes sense for funds to move into the alternative to money, and
that is gold," said CMC Markets analyst Ashraf Laidi.
On Thursday, an interest rate cut from the Bank of England,
signs that the European Central Bank may resume rate cutting
next month, and weaker than expected U.S. economic data fuelled
a 1 percent rise in gold prices.
The SPDR Gold Trust, the world's largest exchange-traded
fund, said its bullion holdings rose to a record 867.19 tonnes
that day. []
ETFs, which issue securities backed by gold bullion, have
proved popular with investors seeking the safety of precious
metals without the drawbacks of holding coins or bars.
The market is now eyeing U.S. January non-farm payrolls data
due at 1330 GMT, which is likely to set a fresh direction for
trade. Analysts polled by Reuters expect the U.S. economy to
have lost more than half a million workers last month
[].
"Precious metals... enjoyed fund flows as safe-haven assets
were sought out," said Standard Bank analyst Manqoba Madinane.
"A negative non-farm payrolls number today could extend this
trend.
"Although precious metals might still benefit, U.S. dollar
resilience could constrain upside potential," he added.
The dollar, typically a key external driver of gold, has
become less of a direct influence as risk aversion has
increased.
While gold usually moves in the opposite direction to the
dollar, both bullion and the U.S. currency are being sought out
by investors as "safe" assets.
The dollar was little changed against the euro on Friday
after the ECB opted to keep interest rates on hold on Thursday,
though it indicated more easing next month. []
The other main external driver of bullion prices, the oil
market, was a touch softer, slipping below $41 a barrel as bleak
economic news fuelled demand fears. []
World equities markets, however, rose for the fourth
straight day as expectations grew that Washington would shore up
the battered financial system. []
The U.S. Senate was due to resume debate on a $900 billion
stimulus plan later in the day, after abruptly calling a halt to
a drive to forge a bipartisan agreement on Thursday night.
[]
"Gold price movements this week maintained their dislocation
from the traditional correlations to EUR/USD and crude oil
trends as worries over inflationary pressure remained on the
backburner -- for now," said Deutsche Bank in a research note.
"While heightened financial and economic concerns continue
to attract interest in the sector, eventual passage stimulus
packages could reignite inflationary fear."
Among other precious metals, silver <XAG=> was little
changed at $12.79/12.87 an ounce against $12.84 late in New York
on Thursday.
Platinum <XPT=> edged up to $982/987 an ounce from $973,
while palladium <XPD=> was at $202/207 an ounce against $200.50.
(Reporting by Jan Harvey; Editing by Keiron Henderson)
