* Dollar weakness lifts gold back above $1,000
* Concerns on U.S. economy boost gold's safe-haven status
* Gold vulnerable to correction on weak physical demand
(Recasts, updates prices, market activity to close; adds
second byline, dateline, previously LONDON)
By Frank Tang and Humeyra Pamuk
NEW YORK/LONDON, Oct 2 (Reuters) - Gold reclaimed the
$1,000-an-ounce level after a choppy session on Friday when the
dollar fell in response to U.S. employers cutting more jobs
than expected in September.
U.S. employers cut 263,000 jobs, sending the unemployment
rate to 26-year high of 9.8 percent. The government data fed
doubts about the pace of economic recovery, hurting the dollar
and boosting gold. []
U.S. December gold futures <GCZ9> settled up $3.60 at
$1,004.30 an ounce on the COMEX division of the New York
Mercantile Exchange. The December contract had hit a low $987
an ounce earlier in the session.
Spot gold <XAU=> was at $1,004.30 an ounce at 2:24 p.m. EDT
(1824 GMT), up from $998.50 an ounce late on Thursday.
"It's dollar related and has tracked it very closely,"
said David Thurtell an analyst at Citigroup. "There are also
still enough people who are worried enough about the economic
outlook out there, to warrant good, ongoing demand for gold."
Gold, often viewed as an alternative to holding the dollar,
benefits from weakness in the U.S. currency, which makes it
more affordable for those buying in other currencies.
While the dollar rose at times this week, its long-term
weaker trend boosted bullion to an 18-month high of $1,023.55
an ounce in September, in sight of the March 2008 record high
of $1,030.80 an ounce.
The dollar fell more than 4 percent in the third quarter
that closed on Thursday on recovery optimism and U.S. fiscal
concerns. []
Bullion investors were focusing on the dollar as a gauge
for risk appetite, said Tom Pawlicki, precious metals and
energy analyst at MF Global.
GOLD VULNERABLE TO CORRECTION
But heavy long positions built up in the gold futures
market made bullion vulnerable to a correction, traders said.
The non-commercial net long position in gold futures on the
COMEX division of the New York Mercantile Exchange stood at an
all-time high of 236,749 lots for the week ended Sept. 22,
figures from the Commodity Futures Trading Commission showed.
Several traders also said there was insufficient physical
demand for gold.
"Supply and demand fundamentals are capping the gold price.
Scrap is becoming more available and jewelry demand goes down
every time the price goes up," said Tony Parry, a gold analyst
at Sydney-based Resource Capital Research.
The economic downturn and high prices this year have
knocked down demand for gold in Turkey, one of the top
consumers of bullion, which is now heading for the lowest ever
recorded annual import levels.
Among other precious metals, silver <XAG=> was at $16.15
versus $16.32, its Thursday late quote in New York.
Disappointing U.S. auto sales in September weighed down on
platinum group metals, which are mainly consumed by the auto
industry as catalytic converters in vehicles.
Platinum <XPT=> was at $1,276 versus $1,277.5 and palladium
<XPD=> was at $294.50 from $287.50, its late quote in New York
on Thursday.
Close Change Pct 2008 YTD
Chg Close % Chg
US gold <GCZ9> 1004.30 3.6 0.4 884.3 13.6
US silver <SIZ9> 16.230 -0.210 -1.3 11.295 43.7
US platinum <PLF0> 1283.40 -5.90 -0.5 941.50 36.3
US palladium <PAZ9> 298.20 5.25 1.8 188.70 58.0
Prices at 2:24 p.m. EDT (1824 GMT)
Gold <XAU=> 1002.50 4.00 0.4 878.20 14.2
Silver <XAG=> 16.15 -0.17 -1.0 11.30 42.9
Platinum <XPT=> 1275.50 -2.00 -0.2 924.50 38.0
Palladium <XPD=> 294.50 7.000 2.4 184.50 59.6
Gold Fix <XAUFIX=> 1003.50 5.50 0.6 836.50 20.0
Silver Fix <XAGFIX=> 16.21 -34.00 -2.1 14.76 9.8
Platinum Fix <XPTFIX=> 1269.00 6.00 0.5 1529 -17.0
Palladium Fix<XPDFIX=> 292.00 1.00 0.3 365.0 -20.0
(Additional reporting by Michael Taylor in London; editing by
Lisa Shumaker)
