(Recasts, adds quotes, changes prices, pvs SINGAPORE)
By Atul Prakash
LONDON, April 4 (Reuters) - Gold drifted higher on light
investor buying on Friday after trading in a narrow band ahead
of U.S. jobs data that could set market direction.
The figures, due at 1230 GMT, is likely to show that the
economy shed jobs in March for a third straight month.
The report will be scrutinised for clues about U.S. interest
rate moves. Lower rates tend to lift gold's appeal as an
alternative investment.
Gold <XAU=> rose as high as $907.55 an ounce and was quoted
at $907.30/908.20 at 1029 GMT, against $903.40/904.20 late in
New York on Thursday, when it gained more than $5.
"U.S. non-farm payrolls data are important for the market,
especially after yesterday's jobless numbers," said Simon Weeks,
managing director of precious metals at Bank of Nova Scotia.
"Gold still has room for more correction, but may stabilise
if the dollar remains weak," he said.
The market got support from the dollar, which ticked lower
versus other major currencies in technically-led trade ahead of
the jobs report.
Signals for non-farm payrolls have been mixed, with a
surprise gain in private sector jobs in March offset by news
that first-time applications for U.S. jobless benefits rose last
week to a 2-1/2 year high.
But overall, investor sentiment has improved in recent
sessions, and markets are now only expecting a 25 basis point
rate cut from the Federal Reserve this month.
"The U.S. labour market data leads often to the widest
swings in financial markets, which would also have a strong
impact on gold and other precious metals," Dresdner Kleinwort
said in a daily market report.
"Gold is expected to profit from a higher-than-predicted
fall of payrolls."
A weaker dollar makes gold cheaper for holders of other
currencies and often lifts bullion demand. The metal is also
generally seen as a hedge against oil-led inflation.
OIL PRICES HELP
The bullion market also got support from oil, which rose
above $104 a barrel, bouncing back from losses in the previous
session as the market focused back on the weakening U.S. dollar
and the U.S. economic outlook.
Gold hit a two-month low of $872.90 an ounce on Tuesday on
fund selling before staging a modest rebound. It was still 12
percent lower than last month's lifetime high of $1,030.80 and
dealers said jewellers showed buying interest at the lows.
U.S. gold futures for June delivery <GCM8> rose $1.10 to
$910.70 an ounce in electronic trade.
"In the coming days, gold should trade in a wide range
between $850-$950 an ounce. Whether gold will test the upper end
of this range will depend on it going through and holding gains
above the $ 910-$920 level," said Wolfgang Wrzesniok-Rossbach,
head of sales at German precious metals trading group Heraeus.
Platinum <XPT=> fell to $1,980/1,990 from $1,985/1,995 an
ounce, having risen more than 2 percent in New York on worries
that South Africa's state utility could not meet electricity
demand from precious metals miners.
South Africa's power crisis may last many years unless there
is a sustained drop in electricity demand in Africa's largest
economy, state power utility Eskom [] said this week.
Supply worries, caused by mining disruption in main producer
South Africa, sparked speculative buying and propelled the price
to record high of $2,290 an ounce on March 4.
Spot silver <XAG=> rose to $17.48/17.53 from $17.36/17.41 an
ounce, but palladium <XPD=> was flat at $436/441 an ounce.
(Reporting by Atul Prakash; editing by Elizabeth Piper)
