(Recasts, adds quotes, changes prices, pvs SINGAPORE)
By Atul Prakash
LONDON, March 7 (Reuters) - Gold drifted higher towards the
key $1,000 level on Friday after slipping from record highs in
the previous session, with investors awaiting U.S. jobs data for
near-term direction.
A record low dollar against the euro and strong oil prices
were seen underpinning gold prices, but platinum and palladium
fell sharply on expectations that South African power problems
could improve in the coming weeks.
Gold <XAU=> rose as high as $984.70 an ounce and was quoted
at $980.15/980.90 at 1124 GMT, against $976.20/976.95 late in
New York on Thursday, when it hit a record high of $991.90.
"U.S. jobs figures are probably going to be on the bearish
side and therefore might encourage a further rally in the gold
price," Dan Smith, analyst at Standard Chartered Bank, said.
"The investor interest is incredibly strong across the whole
commodities complex and gold is the prime hedge against
inflation and a weaker dollar," he added.
The euro powered to fresh peaks above $1.54, after the
European Central Bank signalled it was in no hurry to start
cutting rates in a month when the U.S. Federal Reserve is seen
slashing policy by 75 basis points.
A weak reading from the keenly watched non-farm payrolls,
due at 1330 GMT, could further weaken a dollar already at record
troughs versus the Swiss franc and currency basket and closing
in on the key 100 yen mark for the first time in over a decade.
A weaker dollar makes gold cheaper for holders of other
currencies and often lifts bullion demand. The metal is also
generally seen as a hedge against oil-led inflation.
Oil stayed within sight of its record high from the previous
session, with a tumbling U.S. dollar, fund flows and OPEC's
reluctance to pump extra crude providing support.
"The most important item today is the U.S. labour market; in
particular the non-farm payrolls are in the spotlight," said
Dresdner Kleinwort said in a daily market report.
"Another loss of jobs would fuel speculation that the Fed
would have to cut rates more aggressively. The outlook for
further U.S. rate cuts would weigh on the dollar and would be
positive for gold."
SENTIMENT BULLISH
Gold has gained nearly 20 percent in 2008 as funds,
speculators and investors buy the precious metal on expectations
of further interest rate cuts in the United States and
record-high oil, which elevates its safe-haven appeal.
New York-listed StreetTRACKS Gold Shares <GLD.P>, the
world's largest gold-backed ETF, showed gold holdings of 647.56
tonnes -- near a record of 652.56 tonnes in mid-January.
"In a bull market, strength begets strength and that seems
to the driving force behind the repeated attempt to breach the
$1,000 level," said Pradeep Unni, analyst at Vision Commodities.
"With all fundamentals intact and bullish momentum
ticking consistently, gold should ideally continue to gain in
the coming days."
Platinum fell nearly 5 percent to a 2-week low as selling
picked up on news that mines in South Africa, the world's top
platinum producer, would get more electricity supply.
The South African government confirmed that it would let
mines increase power consumption to 95 percent from 90 percent.
Platinum <XPT=> fell as low as $2,065 an ounce and was last
quoted at $2,080/2,090 an ounce, against $2,170/2,180. It hit a
record high of $2,290 this week on supply concerns.
Silver <XAG=> edged higher to $20.17/20.22 an ounce from
$20.15/20.18 in New York, having reached a 27-year peak of
$21.20 on Thursday. Palladium <XPD=> fell 2.7 percent to
$499/504 from $513/516 an ounce.
(Reporting by Atul Prakash; editing by Michael Roddy)
