By Anna Ringstrom
LONDON, April 3 (Reuters) - Gold steadied near $900 an ounce
in London on Thursday, with investors trading cautiously ahead
of Friday's U.S. employment report, which may determine the
metal's short-term direction.
Spot gold <XAU=> traded at $898.20/899.10 an ounce at 1015
GMT, nearly unchanged from $898.00/898.70 late in New York on
Wednesday, when it jumped 1 percent after oil surged, boosting
its appeal as a hedge against inflation.
Overnight in Asia bullion hit a high of $903.80 an ounce. On
Thursday, oil prices edged down.
"We're in a little bit of a holding pattern at the moment,"
said Tom Kendall, metals analyst at Mitsubishi Corp.
Traders are now eyeing the U.S. Institute for Supply
Management's non-manufacturing index at 1400 GMT. Its employment
component will provide a steer on the likely outcome of Friday's
U.S. jobs report.
Friday's report, which is expected to show that the economy
shed jobs in March for a third straight month, will be watched
for clues about U.S. rate moves. Lower rates boost gold's appeal
as an alternative investment, and vice versa.
"That report can certainly move the markets substantially on
Friday," Kendall said.
The U.S. Federal Reserve has cut its benchmark interest rate
six times since September to 2.25 percent from 5.25.
Analysts at Dresdner Kleinwort said in a research note the
potential for further rate cuts was limited.
"Gold as well as other markets might have got a bit too
optimistic," they added.
Gold has rebounded more than 3 percent since falling to a
two-month low of $872.90 on Tuesday, but it was still well below
a record high of $1,030.80 hit on March 17.
"We see support for gold at $889 (an ounce), with $882 and
$873 as possibilities. Potential resistance is seen at $904, and
secondary resistance at $912. A break higher might see gold test
$920," Standard Bank said in a note.
Gold's usual main driver, the dollar, strengthened broadly
on expectations U.S. rates may not need to be cut as much as
previously thought, but the bullion did not track it as traders
sat on their hands.
"The focus will be today on the purchasing manager indices
in the service sector. The crisis in credit markets has probably
led to a further decline in the UK and the U.S. This might be
supportive for gold as the metal rallied yesterday," Dresdner
Kleinwort said.
Silver <XAG=> was nearly unchanged from late in New York at
$17.16/17.20 an ounce while palladium <XPD=> rose to $440/448 an
ounce from $436/441.
Platinum <XPT=> rose to $1,970/1,980 an ounce from
$1,942/1,952 on worries South Africa's power crisis, which had
disrupted mining, may last many years unless electricity demand
reduced. []
Despite the gains, platinum remained below a record of
$2,290 hit on March 4.
(Editing by Elizabeth Piper)
