* Gold rise with U.S. stocks in quiet post-holiday trade;
* Traders eye next week's U.S. manufacturing, payrolls and
auto sales data for clues on economic strength;
* Gold set for biggest gain since 1999 on safe-haven bid.
(Changes dateline from previous LONDON, updates throughout
with New York prices, comment, reledes)
By Carole Vaporean
NEW YORK, Nov 28 (Reuters) - Gold posted moderate gains in
late Friday business on an afternoon rally in U.S. equity
markets as investors viewed recent efforts by the Federal
Reserve to add liquidity as supportive.
But trading was exceptionally quiet with many participants
remaining on a long holiday weekend following Thursday's U.S.
Thanksgiving Day holiday.
Spot gold <XAU=> was quoted at $817.65/821.65 an ounce at
2:15 p.m. EST (1915 GMT), down from $814.60 an ounce in late
Thursday business.
Traders said terror attacks in Mumbai also underpinned gold
as a safe-haven purchase.
"We're seeing a little bit of strength because of the
horrible situation that's occurring in Mumbai," said Frank
McGhee, head precious metals trader at Integrated Brokerage
Services LLC in Chicago.
"At the same time, we've had a continuation of the rally we
had in the stocks. We had a little bit of light trading, some
thin volatility, but overall we've held fairly well and put a
few dollars on the board," he added.
Over last few weeks when stock markets lost a significant
amount of ground, all asset classes, including gold and other
precious metals positions, were liquidated for cash.
"For most of the last two to three weeks gold has been
trading almost lock-step with stocks, and we won't return to
their disconnect until we can see if the (stock) rally actually
does hold and we see a base," said McGhee.
Chartists noted that gold has managed to form a short-term
base around the $810 level, which held on Friday and will be
watched to see if it continues to lend support.
Looking ahead, some traders said they thought gold's
prospects remained positive as the market awaited the outcome
of OPEC's production meeting this weekend and a spate of U.S.
economic data. Next week's readings include data on
manufacturing, jobs, and auto sectors.
Earlier this week, an announcement by the Federal Reserve
outlining an $800 billion lending facility supported consumer
debt securities and was in turn helping gold. []
The precious metal is heading for its biggest monthly gain
in nine years as investors, spooked by the outlook for the
global economy, are also buying the metal as a safe haven.
Prices have climbed some $90 an ounce, or 12 percent, this
month. Gold is also up 12 percent in euro terms, and 15 percent
in terms of the Australian dollar.
"Investment (in gold) is strong because there is huge
concern over the economic and financial environment, both in
the short and possibly the longer term," RBS Global Banking &
Markets metals strategist Stephen Briggs said.
"The measures being taken to stabilize the situation may
lead to inflationary fears down the road, so gold has a double
benefit from that."
Gold is typically seen as a hedge against inflation.
Dresdner Kleinwort said on Friday it expects gold prices to
average $870 an ounce this year, falling to $740 an ounce in
2009. For silver, it forecasts an average price of $15 an ounce
in 2008 and $9.75 next year.
But Wolfgang Wrzesniok-Rossbach, head of sales at Heraeus,
said delegates at a forum on Thursday organized by the precious
metals group expected gold prices to hit new highs next year.
"Consensus was that in the long run all the bailouts we are
seeing, whether in the car industry, the banking industry or
others ... will (create) inflation, and that would be positive
for gold," he said.
Among other precious metals, spot platinum <XPT=> was
quoted at $871 an ounce, up from $853 late on Thursday.
Palladium <XPD=> was at $186.50 an ounce against $187.50.
Silver was lower at $10.25 an ounce against $10.31.
Industrial precious metals have suffered more than gold
from the economic downturn. Platinum and palladium, which are
chiefly used in autocatalytic converters, have both dropped
significantly from their summer highs.
(Additional reporting by Jan Harvey in London; Editing by
Christian Wiessner)
