(updates with quotes, prices after U.S. payrolls data)
By Atul Prakash
LONDON, March 7 (Reuters) - Gold steadied in late European
trade on Friday after rising more than 1 percent, as the dollar
gained after hitting record lows on weaker-than-expected U.S.
payrolls data and oil prices softened.
Platinum and palladium pared losses after falling sharply on
expectations that South African power problems might improve in
the coming weeks, analysts said.
Gold <XAU=> rose as high as $988 an ounce after the data but
fell to $976.00/976.80 at 1523 GMT, against $976.20/976.95 late
in New York on Thursday, when it hit a record high of $991.90.
"Compared with what it has done before, gold has slightly
underperformed in the last week. My guess is that we are going
to see a few more days of sharp swings," said Stephen Briggs,
economist at SG Corporate and Investment Banking.
"There is a huge uncertainty in the market after these
massive gains we have seen this year. People are getting a bit
nervous of the logic of such high prices in an environment of
the U.S. remorselessly heading into a recession."
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.
The euro turned lower versus the dollar after hitting record
highs, as investors booked profits on gains made following a
drop in U.S. non-farm payrolls for a second straight month.
A firmer dollar makes gold costlier for holders of other
currencies and often lowers bullion demand. The metal is also
generally seen as a hedge against oil-led inflation.
Oil prices fell, but remained within sight of record highs
from the previous session.
"I think we are in for a period of correction for a while
now. Gold will be in consolidation mode ahead of the Federal
Reserve meeting on March 18," said Simon Weeks, managing
director, precious metals, at Bank of Nova Scotia.
ETF INFLOWS
But investor interest in exchange-traded funds (ETFs)
remained strong, and some analysts said market sentiment was
bullish and gold was likely to gain.
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 pared losses after falling nearly 5 percent to a
2-week low 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 $2,095/2,105, against $2,170/2,180. It hit a record
high of $2,290 this week on supply concerns.
Silver <XAG=> edged higher to $20.21/20.26 an ounce from
$20.15/20.18 in New York, having reached a 27-year peak of
$21.20 on Thursday. Palladium <XPD=> fell to a 2-week low of
$495/504 an ounce from $513/516 an ounce.
(Reporting by Atul Prakash; editing by Michael Roddy)
