* Equities firm as risk appetite improves after U.S. data
* Indian, Chinese physical demand set to underpin gold in Q3
* Platinum/palladium ratio slips to lowest since Q2 2004
(Updates prices, adds graphic)
By Jan Harvey
LONDON, Sept 6 (Reuters) - Gold held steady near $1,250 an
ounce in Europe on Monday as expectations for a rise in physical
demand going into the fourth quarter supported prices, but with
gains limited by a recovery in risk appetite.
Spot gold <XAU=> was bid at $1,249.20 an ounce at 1151 GMT,
against $1,248.04 late on Friday. U.S. gold futures for December
delivery <GCZ0> firmed 10 cents to $1,251.20. Trading is set to
be muted during the U.S. Labor Day holiday, analysts said.
"Gold is sitting in a very tight range," said VTB Capital
analyst Andrey Kryuchenkov. "The downside will be limited
because of seasonality, with Asian buyers really looking to buy
on any dips."
"The upside is capped by the non-farm payrolls," he added. A
report on Friday showing payrolls declined by a
smaller-than-expected number last month knocked gold briefly
lower, though prices proved resilient in later trade.
India, the world's biggest consumer of the yellow metal,
has recently entered the traditionally strong festival period
for bullion consumption, which began with Raksha Bandhan in late
August and lasts through November with Dhanteras.
Gold demand in India was solid on Tuesday, dealers reported,
after the rupee rose to a two-week high, making dollar-quoted
assets cheaper for local buyers. []
The dollar recouped losses to rise versus the euro <EUR=> on
Monday, having earlier failed to retain the gains it made last
week after better-than-expected U.S. payrolls data eased
concerns over chances of a global slowdown. []
The data is capping gains in gold as it lifts appetite for
other assets, analysts said. "Good jobs data in the U.S...may
move some funds towards some 'risk on' equity investment,"
Fairfax analyst John Meyer said in a note.
European equities extended the previous session's gains amid
optimism after last week's U.S. jobs data, with world stocks
climbing on hopes that a slip back into recession could be
avoided. [] []
PALLADIUM SHINES
Among other commodities, oil slipped towards $74 per barrel
as the end of the U.S. driving season and high levels of
unemployment in the world's biggest oil consumer raised concerns
over the outlook for demand. []
Copper meanwhile rose to near four-month highs as optimism
returned to the broader markets following better than forecast
U.S. jobs data. []
This also helped underpin industrial precious metals such as
platinum and palladium, which are widely used in the automotive
industry. Palladium posted its strongest weekly rise since late
July last week with gains of 5.7 percent.
On Monday, platinum <XPT=> was at $1,563.50 an ounce against
$1,553.40 and palladium <XPD=> at $525.60 against $526.68.
Palladium's gains last week helped push the ratio of
platinum to palladium -- the number of ounces of palladium
needed to buy an ounce of platinum -- to a low of 2.94 on
Friday, its lowest level since the second quarter of 2004.
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For a graphic showing the ratio of platinum to palladium,
click on: http://r.reuters.com/nah69n
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Both metals benefited from data last week that showed a
hefty rise in Chinese car sales in August. Chinese cars
predominantly use petrol engines, which have a higher loading of
palladium than platinum.
Meanwhile, silver <XAG=> was little changed at $19.86 an
ounce ounces versus $19.87. Friday's Commitment of Traders
report on New York precious metals positioning showed a rise in
net long positions in silver.
"Unsurprisingly silver's recent price rally is closely tied
to Comex positioning," said UBS analyst Edel Tully in a note.
"We continue to like silver; seeing it playing a role as poor
man's gold but also benefiting when risk-on appetite returns."
(Reporting by Jan Harvey; editing by Keiron Henderson)
