* Dollar falls against the euro after poor job data
* Global equities fall to lowest level in 2 years
* Physical buying from jewellers supports
(Updates throughout)
By David Sheppard
LONDON, Sept 5 (Reuters) - Gold rose by more than 2 percent
on Friday, reversing early losses as the dollar pared gains
against the euro.
Bullion had been down in morning trade in London on Friday,
as the dollar's rally to an 11-month high against the euro
reduced gold's appeal as an alternative to the U.S. currency.
However, as the dollar gave back gains to the euro in the
wake of worse than expected employment figures in the United
States, gold leapt higher to a hit a peak of $819.30 an ounce.
[]
Gold <XAU> eased on profit-taking to trade at $806.00/807.00
an ounce at 1444 GMT from $796.15/797.75 late in New York on
Thursday.
"This looks like the last battle of the longs to get prices
to rally," said Commerzbank spot-trader Michael Kempinkski.
"A few shorts got caught on the wrong side when prices went
back through $800, so they've had to cover going into the
weekend. With the way the dollar has recovered lately, gold
should really be down around $750 an ounce by now."
The dollar has risen by more than 17 cents against the euro
since slipping to its weakest ever level of $1.6038 in mid-July.
Gold has fallen from close to $980 an ounce during the same
period, with many analysts saying the dollar's strength or
weakness remains the number one factor in determining the
direction for gold.
"The dollar has benefited from investors fleeing risk
outside of the United States, unwinding positions and moving
money back into dollars," said Lehman Brother's analyst Michael
Widmer.
"Rising risk aversion would generally be bullish for gold,
but the dollar seems to have been the main driver for so many
commodities lately."
Other analysts said that while the risks of a global
slowdown were dominating sentiment on equity markets on Friday,
the fear of systemic financial crisis was not as great as it
once was.
Safe-haven flows into gold emerged after the collapse of
Bear Stearns back in March, shooting the metal to its all-time
high of $1,030.80 an ounce.
Increased physical buying by jewellers in India and the
Middle East at lower price levels is supportive for the metal,
with demand thwarted earlier in the year due to gold's record
breaking advance. []
However, traders said most physical buy orders would not
emerge until prices challenged 11-month lows around $770 an
ounce.
Platinum dropped as concerns over demand for autocatalysts,
due to news of poor car sales in the United States, prompted
investment funds to sell.
Spot platinum <XPT=> fell to $1,370.00/1,390.00 an ounce
from $1,391.50/1,411.50.
The United States has had 10 straight months of declining
car sales -- the longest such downturn since the 2001 recession.
Autocatalysts, used to clean exhaust fumes, account for
more than half of global platinum use.
Platinum's sister metal palladium <XPD=> eased to
$271.50/279.50 from $281.50/289.50, while silver slipped to
$12.69/12.75 from $12.74/12.80 an ounce.
(Additional reporting by Chikafumi Hodo in Tokyo; editing by
Peter Blackburn)
