* Gold pressured as U.S. job losses slow in April
* Risk appetite improves but inflation fears back
* Economic stimulus, quantitative easing underpin prices
(Updates with quotes, closing prices, market activity, adds
NEW YORK dateline/byline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, May 8 (Reuters) - Gold prices slipped on
Friday after U.S. non-farm payrolls fell less than expected in
April and investors took signs of an economic recovery as a
reason to sell bullion held as a safe store of value.
Losses were limited, however, as the dollar weakened and
concern that an economic recovery could spark inflation
supported buying of the metal as a hedge against rising
prices.
Spot gold <XAU=> traded at $914.25 an ounce at 3:35 p.m.
EDT (1935 GMT), up 0.6 percent from its late Thursday quote of
$909.05 in New York.
U.S. gold futures for June delivery <GCM9> settled down 60
cents at $914.90 an ounce on the COMEX division of the New York
Mercantile Exchange.
"Gold is stuck between the people who want to buy it as an
inflation hedge and those who want to sell out because they
think the world is becoming a better place," said Saxo Bank
senior manager Ole Hansen.
The dollar slipped to a six-week low against the euro after
data showed the United States shed fewer jobs than expected
last month, slowing safe-haven flows into the U.S. currency.
Employers cut only 539,000 jobs in April, the smallest
number since October and fewer than the 590,000 losses
predicted by analysts polled by Reuters. []
Wall Street climbed 2 percent on Friday after the data, and
as the results of the government's stress tests on U.S. banks
lifted uncertainty over the health of the financial sector.
While gold's appeal as a haven is decreasing, it continues
to be supported by inflation expectations, analysts said.
"The inflation theme is coming back into the gold market,"
said Deutsche Bank trader Michael Blumenroth. "There is not so
much safe-haven buying into the gold market, but, on the other
hand ... inflation expectations are coming back."
While data shows little inflationary pressure at present,
analysts say heavy interest rate cuts and quantitative easing
could cause inflation to surge when the global economy
recovers, underpinning gold.
The European Central Bank said on Thursday it was cutting
key interest rates to 1 percent, while the Bank of England
announced it was expanding its asset purchase program.
"The general question is: If this engine restarts, can the
liquidity be pulled out, or will it drain without stopping
again," Frank McGhee, head precious metals trader at Integrated
Brokerage Services, said, referring to economic stimulus
packages.
SHIFTING INVESTMENT FLOW
Fresh demand for gold products, such as exchange-traded
funds, remains scarce. The world's largest gold ETF, the SPDR
Gold Trust <GLD.N>, said its holdings were unchanged on
Thursday from the previous session at 1,104.09 tonnes.
Barclays Capital said in a note investor interest in
commodities had shifted away from precious metals towards
energy in the second quarter. []
Precious metals had an inflow of $12.5 billion in the first
three months of 2009, but an outflow of about $500 million so
far in the second quarter.
Silver edged up along with gold, though it remained below a
10-week high of $14.13 an ounce hit on Thursday as investment
was boosted by gains in both industrial and precious metals.
Silver <XAG=> was at $13.97 an ounce, up 1.4 percent from
its previous finish of $13.78.
The gold-silver ratio, a key measure of silver's value, has
slipped to just above 65 from around 71 a month ago.
Among other precious metals, spot platinum <XPT=> was at
$1,145 an ounce, down 0.1 percent from its late Thursday quote
of $1,144, while spot palladium <XPD=> was at $240 an ounce, up
1.3 percent from its previous finish of $237.
(Editing by Walter Bagley)
