* U.S. non-farm payrolls data due 1330 GMT
* Monetary easing, asset volatility boosts safe-haven demand
* SPDR Gold Trust holdings hit record
(Updates with palladium rise)
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 $915.00/917.00 an ounce at 1254 GMT,
against $913.75 late in New York on Thursday.
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," CMC Markets analyst Ashraf Laidi said.
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.
PAYROLLS
The market is now eyeing U.S. January non-farm payrolls data
due at 1330 GMT, which is likely to set new 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. A negative non-farm payrolls number today could
extend this trend," Standard Bank analyst Manqoba Madinane said.
"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 a touch weaker against the euro on Friday
after the ECB opted to keep interest rates on hold on Thursday,
although it indicated more easing next month. []
The other main external driver of bullion prices, the oil
market, slipped below $40 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," Deutsche Bank said 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=> firmed to
$12.96/13.04 an ounce against $12.84 late in New York on
Thursday.
Platinum <XPT=> edged up to $985/990 an ounce from $973.
Palladium <XPD=> rose more than 5 percent to $211.50 an
ounce, boosted by interest in the precious metal from long-term
investors and buying of exchange-traded funds.
"There has been some physical buying for ETFs," Mitsubishi
precious metals strategist Tom Kendall said.
"There have been some banks highlighting the fact that it is
undervalued relative to the other precious metals. That has
pulled in a bit of buying from some of the funds."
Palladium was at $210/214 an ounce against $200.50.
(Reporting by Jan Harvey; Editing by Sue Thomas)
