* U.S. non-farm payrolls fall less than expected in August
* U.S. non-manufacturing sector slows in the same month
* Silver rallies more than 1 pct to near 2-1/2 year high
* Coming up: US markets shut Mon, Fed Beige Book on Wed
(Recasts, updates prices, market activity; adds second byline,
dateline, previously LONDON)
By Carole Vaporean and Jan Harvey
NEW YORK/LONDON, Sept 3 (Reuters) - Gold ended lower on
Friday but bounced up from three-day lows after ISM service
sector data came in weaker than forecast and the dollar fell.
Silver climbed to its highest level since March 2008 as
industrial metals rallied on a U.S. labor market report that
was much less weak than feared.
That same U.S. non-farm payrolls data pushed gold to
session lows in early trade, as investors unwound safe-haven
bids.
Gold retraced some losses on the tepid service sector
report, and as investors shored up their positions ahead of the
long U.S. holiday weekend. New York commodity and financial
markets will be shut on Monday for the U.S. Labor Day holiday.
Spot gold <XAU=> slipped to $1,246.70 an ounce by 3:36 p.m.
EDT (1936 GMT) from $1,250.74 an ounce late Thursday.
COMEX December gold futures <GCZ0> lost $2.30 to settle at
$1,251.10 an ounce on the COMEX division of the NYMEX. It had
tumbled to a three-day low at $1,239.20 after the labor
report.
Later, an industry report 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. []
Further, the ISM report's employment component fell to 48.2
from 50.9, and new orders dipped sharply to 52.4 from 56.7,
suggesting a slowdown in the sector.
The weak service sector reading helped counteract the boost
to risk appetite from the report that U.S. non-farm payrolls
fell by only 54,000 in August. Economists had forecast a
decline of 100,000 jobs. []
"I think there was some knee-jerk selling right after the
jobs number came out. And it got a little bit overdone. The
entire move down came on the number," said Sterling Smith,
analyst for Country Hedging Inc. in St. Paul, Minnesota.
"The rest of the day gold was gathering strength on the
weaker dollar," Smith added.
Analysts said gold remains in a longer-term uptrend, noting
that while the jobs data were not as weak as expected, they
still did not paint a glowing picture of the U.S. labor market.
(Graphic: http://link.reuters.com/fym39n )
Societe General analyst David Wilson noted that recent U.S.
data has tended to point toward a relatively soft recovery.
"There is still an overall sense of caution, which should
still be supportive for gold," he said.
Smith said he sees gold reaching new all-time highs by the
end of September. But, he added, a light economic calendar next
week and 2 holidays might keep trade light and ranges slim.
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 stunted for a second day
as traders were cautious about placing fresh orders after
prices traded near a record high, dealers said.
[]
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 $1,553.40 an ounce against
$1,543.10. Palladium <XPD=> was at $526.69 versus $520.93.
Prices at 3:27 p.m. EDT (1927 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1251.10 -2.30 -0.2% 14.1%
US silver <SIZ0> 19.915 0.277 0.0% 18.2%
US platinum <PLV0> 1561.10 9.60 0.6% 6.1%
US palladium <PAZ0> 529.05 5.60 1.1% 29.4%
Gold <XAU=> 1247.10 -3.19 -0.3% 13.8%
Silver <XAG=> 19.85 0.27 1.4% 17.9%
Platinum <XPT=> 1553.00 9.90 0.6% 6.0%
Palladium <XPD=> 527.50 6.57 1.3% 30.1%
Gold Fix <XAUFIX=> 1240.50 -11.50 -0.9% 12.4%
Silver Fix <XAGFIX=> 19.66 21.00 1.1% 15.7%
Platinum Fix <XPTFIX=> 1553.00 2.00 0.1% 5.9%
Palladium Fix <XPDFIX=> 524.00 2.00 0.4% 30.3%
(Reporting by Carole Vaporean; Editing by David Gregorio)
