* U.S. economy shed 651,000 jobs in Feb, data showed
* Dollar extends losses after U.S. non-farm payrolls data
* SPDR ETF holdings static, iShares sees outflow
(Updates prices, adds comment, data reaction)
By Jan Harvey
LONDON, March 6 (Reuters) - Gold softened in choppy trade on
Friday, as data showing the U.S. economy shed more than half a
million jobs in February initially sent the metal to session
highs, before it slipped lower as equities strengthened.
Spot gold <XAU=> was at $931.00/932.20 an ounce at 1441 GMT
from $932.00 late in New York on Thursday. It touched a high of
$944.60 in the immediate wake of the data, which was broadly in
line with expectations, before slipping to a low of $929.25.
U.S. gold futures for April delivery <GCJ9> on the COMEX
division of the New York Mercantile Exchange rose $4.20 to
$932.00 an ounce.
"People were expecting quite a bad number, but in the event
(the non-farm payrolls data) came in just beating consensus, so
that has taken some of the gloss off gold," said Calyon analyst
Robin Bhar.
"If the jobs data had come in at 1 million-plus, as some
people expected, gold would have soared, but it didn't. That has
taken a bit of a shine off the metal."
Peter Fertig, a consultant at Quantitative Commodity
Research, said gold's initial spike higher had coincided with a
slide in the dollar versus the euro.
The dollar extended losses against the euro after the
numbers showed the U.S. economy shed 651,000 jobs last month,
adding to concerns that the recession is still deepening.
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A weaker dollar typically boosts gold, which is often bought
as an alternative asset to the currency. While the relationship
has recently weakened as both assets reacted to risk aversion,
it remains an important factor in the gold price, analysts said.
The metal moved higher early in the session as Wall Street's
slide to 12-year lows on Thursday curbed appetite for equities
in Europe and Asia and diverted investment to gold.
Prices subsided before the data as equities recovered, but
ticked higher in the immediate wake of its release. Gold has
since been pressured from highs as U.S. stocks opened higher
after the report, while European equities extended gains.
"Gold is considered in the first instance at the moment an
insurance premium and a safe haven," said Commerzbank analyst
Eugen Weinberg. "It is the equity markets and risk aversion that
are moving the market."
SCEPTICAL
The underlying fundamentals of gold remain weak, however,
with jewellery demand slumping and scrap supply picking up.
Demand for gold in India, the world's largest market for the
precious metal, remained slack as international prices rose for
a second day on Friday, while selling of scrap stepped up as
gold holders cashed in after the recent price gains.
"There are no hopes of traders buying," said Haresh Acharya,
head of the bullion desk at Parker Agrochem Exports in
Ahmedabad. "Sellers are coming in in huge numbers."
Buying of gold-backed exchange traded funds was also
stagnant, with holdings of New York's SPDR Gold Trust <GLD>,
static for a fifth consecutive session.
Falling demand for gold jewellery is being balanced by the
strength of investment demand, however, which is rising on fears
over the longer-term implications of the government's attempts
to kick-start economic recovery, partly by flooding banking
systems with money via "quantitative easing".
"The fundamental argument (for gold) is bolstered by the
currency implications of central banks' quantitative easing and
bank stocks' accelerating damage," said CMC Markets currency
strategist Ashraf Laidi.
"Investors' rising tendency for more frequent profit-taking
at these uncertain times is partly behind protracted pullbacks
in the metal, -- but not more than 10 percent, which only
bolsters the sustainability of the (upward) trend," he added.
Among other precious metals, spot silver <XAG=> was at
$13.29/13.35 an ounce from $13.22. Earlier it touched a one-week
high of $13.50.
Spot platinum <XPT=> firmed to $1,069/1,079 an ounce from
$1,058.50.
"That platinum remained comfortably above $1,000 an ounce
despite ostensibly bearish news leads us to believe that the
market is building a base from which to trade higher," said HSBC
analyst James Steel.
Spot palladium <XPD=> rose to $199.50/204.50 an ounce from
$196, having earlier reached a 10-day high of $201.
(Editing by Keiron Henderson)
