* U.S. unemployment rises to 6.5 pct, highest since 1994
* Dollar extends losses a touch, oil rises
(Recasts, adds comment, updates prices)
By Jan Harvey
LONDON, Nov 7 (Reuters) - Gold remained firm on Friday after
weaker-than-expected U.S. non-farm payrolls data, as the dollar
softened a touch against the euro and oil ticked up.
Spot gold <XAU=> was quoted at $736.25/738.25 at 1456 GMT
against $731.55 in late New York trade on Thursday.
"We are pretty much range-trading here in gold, as the U.S.
dollar didn't react too much after the figures," said
Commerzbank senior trader Michael Kempinski.
"We see some physical demand at $730 and lower," he added.
Data released by the Labor Department showed U.S. employers
cut payrolls by 240,000 in October, while the unemployment rate
hit 6.5 percent, its highest since 1994.
The dollar weakened against the euro and a basket of
currencies in the wake of the report as investors worried about
the outlook for the U.S. economy. []
Gold has been pressured in recent months by a recovery in
the dollar against the euro, with investors worrying about the
spreading economic crisis.
Strength in the U.S. currency tends to weigh on gold, which
is often bought as a currency hedge. Some forex analysts believe
the dollar is set to remain firm despite a stream of negative
data on the U.S. economy.
"The dollar is likely to remain fairly strong, so that will
cap rallies (in gold), and the oil price is not providing much
support," said Calyon analyst Robin Bhar.
"All the time we have worries about the economy and the
financial system, so we will see safe haven buying, but I
suspect on dips," he added.
Fears over the outlook for the global economy are boosting
the precious metal's appeal as a haven from risk.
A series of interest rate cuts in Europe on Thursday
provided a temporary fillip to stock markets, but the gains were
not sustained.
"While (the cuts) add to the enormous monetary stimulus
already in motion globally, markets remain unconvinced that it
is enough to save the world from a major economic downturn,"
noted Standard Bank analyst Walter de Wet.
Nontheless, a low interest rate environment should boost the
appeal of gold, as it will cut the opportunity cost of investing
in non-interest bearing assets such as the precious metals.
PLATINUM
Platinum <XPT=> was at $844.50/864.50 an ounce against $823,
having earlier touched a high of $865.50. Its sister metal
palladium <XPD=> tracked it higher to a peak of $230 an ounce,
before easing to $224/234 against $214.50.
A supply outage in major producer South Africa, where Anglo
Platinum <AMSJ.J> said a smelter shutdown would cut output by up
to 200,000 ounces, and a weaker dollar are helping platinum to
rise, analysts said.
"People are looking at the charts and realising both
platinum and palladium have broken out of the downtrend in the
charts, and that is bringing in more funds on the long side,"
says Mitsubishi precious metals strategist Tom Kendall.
"There is a reasonable chance that we have seen the lows in
platinum, and probably in palladium also," he added.
Interest in platinum has been renewed after the metal fell
more than 50 percent from July onwards, with investors seeking
to buy into the metal at lower prices, traders said.
Both platinum and palladium have been pressured sharply
lower by fears demand for the metals from automakers, who
account for around half of annual consumption, will decline in
the face of the economic slowdown.
Ford Motor Co <F.N> posted a worse-than-expected quarterly
loss on Friday and said it will explore asset sales as its cash
reserves become depleted as sales fall. []
Among other precious metals, spot silver <XAG=> edged up to
$9.99/10.09 from $9.96 an ounce late in New York on Thursday.
(Reporting by Jan Harvey; editing by Anthony Barker)
