* U.S. non-farm payrolls fall less than expected in August
* U.S. non-manufacturing sector slows in the same month
* Dollar falls versus euro, equities climb after U.S. data
* Silver rallies more than 1 pct to near 2-1/2 year high
(Updates prices, adds graphic)
By Jan Harvey
LONDON, Sept 3 (Reuters) - Gold steadied on Friday as data
showing the U.S. non-manufacturing sector grew in August at a
slower pace than July helped offset a stronger-than-expected
U.S. non-farm payrolls reading to lift the metal's haven appeal.
Silver climbed, meanwhile, to hit its highest since March
2008 as investment appetite for the precious metals improved.
Spot gold <XAU=> was bid at $1,249.80 an ounce at 1542 GMT,
off a low of $1,235.70 an ounce, against $1,250.74 late in New
York on Thursday. U.S. gold futures for December delivery <GCZ0>
fell $2.80 to $1,250.50.
An industry report released on Friday showed the U.S.
non-manufacturing sector grew in August for an eighth straight
month but at a slower pace than July and at a rate that was
below expectations. []
This helped counteract the positive impact on risk appetite
of an earlier release showing that while U.S. employment fell
for a third straight month in August, the decline was far less
than expected. []
"Non-farm payrolls data has come out much better than
expected -- the consensus was for job losses of about 100,000,
it has come out at 54,000," said Societe General analyst David
Wilson. "Gold is losing a bit of momentum."
However, recent U.S. data has tended to still point towards
a relatively soft recovery, he said. "There is still an overall
sense of caution, which should still be supportive for gold."
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For a graphic showing changes in non-farm payrolls, click
on: http://link.reuters.com/fym39n
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Gold has benefited in recent weeks from concerns that weak
growth would push the Fed into further quantitative easing
measures, which could ultimately prove inflationary.
The dollar fell versus the euro <EUR=> in the wake of the
data, though it climbed versus the Japanese yen, as the numbers
boosted appetite for higher-yielding currencies. []
Stock markets rose to a fresh three-week high in Europe
after the jobs report surprised on the upside, though they later
pared gains after U.S. ISM data. U.S. stock markets were also
higher. [] []
Among other commodities, U.S. crude futures fell 1.8
percent, while base metals like copper and aluminium pared
gains. [] []
ETF HOLDINGS FALLS
Recent strength in gold prices notwithstanding, physical
demand for the precious metal was muted.
The world's largest gold-backed exchange-traded fund, New
York's SPDR Gold Trust <GLD.P>, reversed the inflows it reported
over the last week, with its holdings falling more than 9 tonnes
to 1,294.908 tonnes on Thursday. []
Meanwhile, Indian gold buying was muted for a second day on
Friday as traders were cautious about placing fresh orders after
prices traded near a record high, dealers said. []
Surging prices have weighed heavily on the price-sensitive
Indian market in recent years. However, market watchers have
noted some tentative signs of recovery in demand as buyers
become acclimatised to higher prices.
"Indian festival seasonal demand looks set to be healthy,"
said bullion dealer Goldcore in a note.
Among other precious metals, silver <XAG=> was bid at $19.85
an ounce against $19.58, having earlier hit a new near 2-1/2
year high at $19.92 an ounce.
Technical analysts at Barclays Capital said the metal had
re-established its uptrend after breaking through its June high
at $19.47 an ounce earlier this week.
"We are bullish on silver, looking for an eventual test of
the 2008 high of $21.35," said ScotiaMocatta in a note.
Elsewhere platinum <XPT=> was at $1,558.50 an ounce against
$1,543.10, while palladium <XPD=> was at $531 versus $520.93.
(Editing by Anthony Barker)
