* Investors remain on the sidelines ahead of U.S. data
* SPDR Gold holdings <XAUEXT-NYS-TT> steady
(Recasts, updates prices and comments, previous TOKYO)
By Humeyra Pamuk
LONDON, Oct 2 (Reuters) - Gold was steady on Friday, drawing
little support from foreign exchange markets where the dollar
was flat against a basket of currencies, with the market subdued
ahead of key U.S. jobs data due later in the day.
Gold <XAU=> was at $998.30 an ounce at 0907 GMT, compared
with $998.50 an ounce on Thursday.
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. []
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.
"The market's primarily driven by the dollar," said Ole
Hansen, senior manager at Saxo Bank. "The nonfarm payrolls will
be an important gauge for the recovery that we've been seen for
the past few months," he said.
U.S. gold futures for December delivery <GCZ9> were at
$999.5 an ounce, versus Thursday's $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
end-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.
"My feeling is any uptick at the moment is a sell
opportunity because the market is still pretty long," Hansen
said.
The non-commercial net long position in gold futures on the
COMEX division of the New York Mercantile Exchange stood at an
all-time high of 236,749 lots for the week ended Sept. 22,
figures from the Commodity Futures Trading Commission showed.
HEAVY LONGS
"We would look for gold to hold the $985-1,020 area but gold
remains at risk to a deeper correction as falling risk appetite
could spook some of the recently added fund longs," said James
Moore at Thebulliondesk.com in a research note.
Moreover, several traders 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.
Global recession and high prices this year have knocked down
demand for gold in Turkey, one of the top consumers of bullion,
which is now heading for the lowest ever recorded annual import
levels.
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.
[]
Among other precious metals, silver <XAG=> was lower at
$16.27 from $16.32
Platinum <XPT=> was at $1,270 from $1,277.5 and palladium
<XPD=> was at $289 from $287.50
(Reporting by Humeyra Pamuk, Editing by Keiron Henderson)
