* U.S. unemployment rises to 6.5 pct, highest since 1994
* Dollar initially drops, oil rises
(Recasts, updates with closing prices, market activity, adds
NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Nov 7 (Reuters) - Gold ended slightly
firmer in mixed trade on Friday after the U.S. government
reported surprisingly weak jobs data, as the dollar softened
against the euro and oil ticked up.
"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.
Spot gold <XAU=> was at $734.10 at 3:28 p.m. EST (2028
GMT), up 0.5 percent from Thursday's close of $732.95.
U.S. December gold futures <GCZ8> settled up $2.00 at
$734.20 an ounce amid light volume on the COMEX division of the
New York Mercantile Exchange.
Labor Department data showed U.S. employers cut payrolls by
240,000 in October. The unemployment rate hit 6.5 percent, its
highest since 1994. The dollar declined as investors worried
about the outlook for the U.S. economy. []
Analysts said a bounce in the dollar could put a damper on
gold's rise in the near term.
"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.
Gold has been pressured in recent months by a recovery in
the dollar as the economic crisis has spread.
Strength in the U.S. currency tends to weigh on gold, often
bought as a currency hedge. Some forex analysts believe the
dollar will stay firm despite negative U.S. economic data.
Still, 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
boosted stock markets, but 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.
Low interest rates should boost the appeal of gold, as it
will cut the opportunity cost of investing in noninterest
bearing assets such as the precious metals.
DISRUPTIONS BOLSTERS PLATINUM
Platinum <XPT=> was at $845 an ounce, up from Thursday's
close of $826.50. Its sister metal palladium <XPD=> tracked
platinum higher to $220.50 an ounce, against $215 on Thursday.
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=> was
essentially flat at $9.96 compared with its previous close late
in New York on Thursday.
