* Mideast unrest, soft dollar, euro zone nerves lift prices
* Prices head for quarterly gain, but smallest since Q3 2008
* Markets fret over U.S. monetary policy ahead of jobs data
(Updates with comment, refreshes prices)
By Jan Harvey and Amanda Cooper
LONDON, March 31 (Reuters) - Gold was set for a tenth
straight quarterly gain on Thursday, rising by nearly 1 percent
as the dollar weakened and concern over euro zone sovereign debt
and unrest across the Middle East encouraged buying.
Low real interest rates and high liquidity left by the
world's central banks' quantitative easing programmes have been
major drivers for gold, although its performance this quarter is
set to be its weakest since the third quarter of 2008, before
the financial crisis took hold.
The prospect of monetary tightening in the United States and
the euro zone has undermined some of the appeal for gold, which
has seen a net outflow 2.18 million ounces of metal, or 3.5
percent, from the major exchange-traded funds so far this year.
Spot gold <XAU=> was bid at $1,437.50 an ounce at 1401 GMT,
against $1,423.38 late in New York on Wednesday. U.S. gold
futures for June delivery <GCv1> rose $14.30 to $1,439.70.
"Gold just managed by a whisker to produce another positive
quarter, the tenth in a row. Overall, the performance was not
impressive amid the multitude of uncertainties that the world
had to deal with during the first three months of 2011," said
Ole Hansen, senior manager at Saxo Bank.
"A cessation (in quantitative easing programmes) could
reduce the investor demand even further, but inflation is
currently rising faster than expected and ... the market always
moves six months ahead of the event ... a prolonged fear of
inflation will have investors looking at gold again."
Investors are awaiting a report on U.S. non-farm payrolls
for March due Friday, considered a key indicator of the health
of the U.S. economy. Forecasts suggest the economy recorded a
second month of solid job growth this month. []
Signs the U.S. jobs market is recovering could support calls
from some Fed officials to wind up the central bank's monetary
easing programme earlier than expected.
"Until we see a substantial decrease in liquidity or a rise
in real interest rates, you would look for an upward trend, and
all these other factors like the euro zone debt and Middle East,
North Africa issues are also a short-term support," said
Standard Bank analyst Walter de Wet.
But he said while the bank still expects to see gold prices
above $1,500 an ounce, this is unlikely to happen before the
third quarter.
"We're unlikely to see massive new inflows into gold at the
moment because people are uncertain about what the Fed's going
to do," he said. "We are pretty certain they are not going to
change interest rates for the next three quarters at least, but
they may start reducing the balance sheet."
DOLLAR SLIPS
The dollar fell 0.2 percent against a basket of major
currencies on Thursday. A weaker dollar makes assets priced in
the U.S. currency cheaper for other currency holders. []
The euro <EUR=> pared some gains against the dollar after
sources indicated the European Central Bank will not announce
plans for a new liquidity facility to help Irish banks.
[]. []
Rating agency Moody's warned further sovereign ratings
downgrades for euro zone countries cannot be ruled out, which
fed ongoing investor concern about the region's finances.
[]
Concerns over euro zone sovereign debt were a major factor
in last year's 30 percent gold price rise.
Oil prices also climbed, with Brent crude futures <LCOc1>
heading for their biggest quarterly gain in almost two years as
violence swept across the Middle East and North Africa. []
On the supply side of the market, China's leading mined gold
producer, Zijin Mining, said it expects gold prices to rise
above $1,500 an ounce by year end, and said it plans to produce
62.57 tonnes of gold this year. []
Silver <XAG=> was bid at $37.89 an ounce against $37.44.
Silver is on track for a ninth consecutive quarterly gain, with
a 22 percent increase in the first three months of the year,
benefiting from gains in gold and expectations that industrial
demand will improve.
The gold:silver ratio dropped to its lowest since 1983 on
Thursday at 37.8 as silver outperformed gold.
Platinum <XPT=> was at $1,775.74 an ounce against $1,765.85,
while palladium <XPD=> was at $766.97 against $751.78.
(Reporting by Jan Harvey; editing by Alison Birrane)
