* Dollar rallies as US payrolls data boosts recovery hopes
* Central Bank Gold Agreement renewed for five-year term
* South African union, Eskom hope to avoid strike program
(Recasts, updates with quotes, closing prices, adds NEW YORK
to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Aug 7 (Reuters) - Gold futures ended lower
in choppy trade Friday as the dollar rallied on optimistic U.S.
jobs data and the market digested news that European central
banks extended an agreement limiting gold sales.
But gold could soon reverse its losses if global monetary
easing prompts investors to buy more gold as a hedge against
inflation.
Tom Hartmann, a gold analyst at Altavest, said gold would
likely rise in coming weeks as the dollar weakens on inflation
worries.
"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."
U.S. December gold futures <GCZ9> settled down $3.40 at
$959.50 an ounce on the COMEX division of the New York
Mercantile Exchange.
Spot gold <XAU=> was at $955.10 an ounce at 2:19 p.m. EDT
(1819 GMT), against $962.15 late in New York on Thursday.
Currency traders said the dollar gained in response to data
indicating economic recovery in the United States. []
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.
Bullion received support from news a group of central banks
in Europe 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. []
The central banks said they recognized the International
Monetary Fund's intention to sell 403 tonnes of gold and noted
that such sales can be accommodated within the above ceiling.
[]
UBS Investment Bank said in a note that the accommodation
of possible IMF sales showed that the signatories were not
expecting to utilize the full 400 tonnes per annum from their
own disposal plans.
The International Monetary Fund said on Friday it welcomed
the CBGA and said it expected its membership to authorize the
sale of 403 tonnes of IMF gold in coming weeks. []
CAR SCRAPPAGE
Platinum was supported by supply worries from South Africa,
even as the country'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.
Investors continued to focus on the extension of the U.S.
"cash for clunkers" auto program by the Congress, under which
people can trade in older cars in return for cash toward the
purchase of new ones. The program helped push platinum prices
higher.
Palladium and platinum are primarily used by carmakers for
catalytic converters.
Spot platinum <XPT=> was at $1,263.50 an ounce against
$1,260 late on Thursday. Palladium <XPD=> was at $275 against
$269.50. Silver <XAG=> was at $14.66 an ounce against $14.54.
Close Change Pct 2008 YTD
Chg Close Pct Chg
US gold <GCZ9> 959.50 -3.40 -0.4 884.30 8.5
US silver <SIU9> 14.668 0.023 0.2 11.295 29.9
US platinum <PLV9> 1268.50 5.10 0.4 941.50 34.7
US palladium <PAU9> 279.05 7.95 2.9 188.70 47.9
Prices at 2:19 p.m. EDT (1819 GMT)
Gold <XAU=> 954.95 -7.20 -0.7 878.200 8.7
Silver <XAG=> 14.66 0.12 0.8 11.30 29.7
Platinum <XPT=> 1263.50 3.50 0.3 924.50 36.7
Palladium <XPD=> 275.00 5.50 2.0 184.50 49.1
Gold Fix <XAUFIX=> 956.00 -8.00 -0.8 836.50 14.3
Silver Fix <XAGFIX=> 14.650 -0.020 -0.1 14.760 -0.7
Platinum Fix <XPTFIX=> 1260.00 0.00 0.0 1529.00 -17.6
Palladium Fix <XPDFIX=> 271.00 0.00 0.0 365.00 -25.8
(Additional reporting by Catherine Bosley in London; Editing
by Jim Marshall)
