(Recasts, adds quotes, changes prices, pvs SINGAPORE)
By Tamora Vidaillet
LONDON, May 1 (Reuters) - Gold steadied in Europe on
Thursday, after jumping overnight by nearly 2 percent on a cut
in U.S. interest rates, as the dollar recovered from early lows.
Gold <XAU=>, which has fallen in recent sessions on the back
of relative dollar strength, was at $865.00/865.70 an ounce at
0953 GMT, within arm's reach of a three-month low of $862.30 on
Wednesday, when it closed at $864.65/866.05 in New York.
"There is a certain investor fatigue that has crept in the
market in the last few weeks and I think it is going to take a
bit of oomph to get it going again," said Stephen Briggs,
economist at SG Corporate and Investment Banking.
"I feel that the risk is more that rather than how much it
will go up if the dollar weakens, it is how much it might go
down if the dollar fails to weaken," he said.
The earlier jump in gold followed the latest move by the
U.S. Federal Reserve to trim rates by a quarter of a percentage
point on Wednesday. That prompted the dollar to weaken initially
against the euro.
Investors struggled to interpret the Fed's take on the
economy and were left wondering whether it would be the last in
a series of rate cuts.
A firmer dollar makes gold costlier for holders of other
currencies and often lowers bullion demand. Also, lower interest
rates tend to boost gold's appeal as an alternative investment
to stocks and bonds.
All eyes are now turned towards U.S. jobs data on Friday for
further clues on the health of the economy and the direction of
the dollar, traders say.
"I think tomorrow's numbers will be absolutely key," said
Jeremy East, head of metals trading at Standard Chartered Bank.
"If we see a weaker than expected number, then we're going
to see the dollar move very sharply lower ... and we are off to
the races again. Gold could then turnaround," he said.
Overall trading was slow due to holidays in much of Asia
including China and Southeast Asia.
Dealers expected volatile days ahead after a drop in gold
exchange-traded funds holdings in the world's largest ETF,
StreetTRACKS Gold Shares <XAUEXT-NYS-TT>, to 580.45 tonnes as of
Wednesday, shedding nearly 10 percent of its holdings in the
last 10 days.
Spot platinum <XPT=> fell to $1,888.50/1,908.50 an ounce
from $1,906/1,921 late in New York. Silver <XAG=> rose to
$16.93/17.00 an ounce from $16.60/16.65, while spot palladium
<XPD=> jumped to $417.50/425.50 an ounce from $410.50/418.50.
(Additional reporting by Lewa Pardomuan in Singapore)
(Reporting by Tamora Vidaillet; editing by Chris Johnson)
