* Central Bank Gold Agreement renewed for five-year term
* South African union, Eskom hope to avoid strike
* Platinum eases after U.S. extends car scrappage programme
(Recasts lead, updates quotes, prices, background)
By Jan Harvey and Catherine Bosley
LONDON, Aug 7 (Reuters) - Gold eased on Friday, weighed down
by a stronger dollar, which rose on optimism about economic
recovery following better-than-expected U.S. jobless data.
Currency traders said the dollar, which once benefited from
negative data as investors sought less risky assets, gained in
response to data indicating economic recovery in the United
States was under way. []
Spot gold <XAU=> was bid at $957.30 an ounce at 1517 GMT,
against $962.15 late in New York on Thursday. U.S. gold futures
for December delivery <GCZ9> on the COMEX division of the New
York Mercantile Exchange were down $2.90 at $959.80.
Tom Hartmann, a gold analyst at Altavest, said gold would
likely rise in coming weeks, as the dollar weakened on worries
resurfacing about inflation.
"The dollar is only going to rally if belief about inflation
dies down. With an economic recovery or people thinking the
recession is slowing down or ending, thoughts of inflation are
going to increase," he said.
"The longer term outlook on the dollar is still negative."
The U.S. non-farm payrolls data showed U.S. employers cut
247,000 jobs in July, fewer than expected. Markets took the news
as evidence the economy was turning around. []
A weaker dollar often prompts buying of gold as an inflation
hedge, and also makes bullion cheaper to holders of other
currencies.
Bullion received support from news a group of central banks
in Europe had renewed the Central Bank Gold Agreement (CBGA), a
pact to limit gold sales for a five-year period to 400 tonnes a
year from 500 tonnes. []
J.P. Morgan said in a research note it expected sales from
CBGA signatories to be limited and not to destabilize the gold
market in the medium or long term.
CAR SCRAPPAGE
News that the United States on Friday extended its "cash for
clunkers" auto programme, under which people can trade in older
cars in return for cash towards purchase of new ones, helped
push platinum prices lower.
Palladium and platinum are primarily used by carmakers for
catalytic converters.
Spot platinum <XPT=> bid was at $1,254 an ounce against
$1,260 late on Thursday. Palladium <XPD=> was at $271.50 against
$269.50. Silver <XAG=> was at $14.64 an ounce against $14.54.
"A correction wasn't entirely unexpected," James Steel,
analyst with HSBC Securities, said of the metals strong gains
this week. "At least an element of the pullback is related to an
extension of the cash for clunkers."
He said many of the models being traded in had a much higher
platinum component than new cars, and that the increased amount
of scrap was depressing primary prices.
For more on the affect of the auto industry on platinum
prices see []
Platinum was also weighed down by news South Africa's
biggest union and state power firm Eskom voiced hopes ahead of
talks on Friday that a strike will be averted. []
South Africa is by far the largest source of platinum
globally. Talk of a strike took platinum and palladium prices to
multi-month highs earlier in the week.
"Our general view was that strikes to the extent power will
be disrupted are highly unlikely," said Standard Bank analyst
Walter de Wet.
(Editing by James Jukwey)
