* Gold backs off highs, but still near records
* Vietnam says will grant import licenses and quotas
* Coming up: U.S. non-farm payrolls; Oct 8, 1230 GMT
(Updates with comment, refreshes prices)
By Amanda Cooper
LONDON, Oct 7 (Reuters) - Gold slid below $1,340 an ounce in
its most volatile trading day in two months on Thursday, having
earlier hit a record high on investor expectations for the
Federal Reserve to support flagging U.S. growth.
Spot gold <XAU=> was last at $1,337.75 an ounce at 1451 GMT,
up from $1,345.80 late on Wednesday, but down from an all-time
peak of $1,364.60 struck earlier in the day as a rebound in the
dollar against the euro <EUR=> dented gold.
The Fed is still widely expected to resume quantitative
easing -- in which the central bank would buy government bonds
for example and pump extra cash into the financial system to
keep interest rates low -- which has pushed the dollar down 7
percent against a basket of currencies in the last month.
Gold, which usually benefits from dollar weakness due to its
inverse relation with the U.S. currency, has gained nearly 10
percent in the same period.
The price has risen by 2.3 percent this week, set for its
fourth week of gains, and on Thursday witnessed its most
volatile day of trade since mid-August, according to Reuters
data.
U.S. gold futures for December delivery <GCZ0> hit a fresh
record high at $1,366 an ounce, before easing to $1,350.40, up
$2.4 an ounce on the day.
Market watchers have expected gold to succumb to some
profit-taking before scaling new heights as uncertainty over the
global economic outlook prevails.
"The whole world uncertainty, the Western slowdown, the
Eastern slowing groth, the currency turmoil, the
inflation/deflation debate, it all seems supportive for gold,"
said Credit Agricole analyst Robin Bhar.
DOLLAR GAINS
Gold has gained more in dollars so far this month than in
other currencies. In euros <XAUEUR=R> gold is up just 0.6
percent this month, compared to a 2.8 percent gain in
dollar-priced gold, while yen-priced <XAUJPY=R> and
sterling-priced gold <XAUGBP=R> are both up 1.3 percent.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a graphic of gold priced in different currencies:
http://r.reuters.com/xeg27p
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"We look at the reasons for holding gold and other precious
metals and, above everything else, it is the idea of a store of
value to protect against currency debasement," said Natixis
strategist Nic Brown. "Whether you're undergoing quantitative
easing or whether you're devaluing your currency against others,
it all adds up to pretty much the same thing."
Both the Bank of England and the European Central Bank left
their benchmark rates unchanged, as expected. The ECB signalled
it was happy with the signs of normalisation in the money
markets and said economic recovery in the euro zone would
continue. []
Gold retreated from earlier highs after the world's
third-largest producer of the metal, Anglogold Ashanti <ANGJ.J>
said it had completed the buy-back of its hedgebook, previously
the largest in the industry. []
But on a supportive note for gold, state media in Vietnam
reported that Asia's second largest bullion consumer after India
would grant licences and quotas to import gold, which was banned
in mid-2008 as policymakers attempted to tackle the country's
trade deficit. []
Nervousness over the outlook for U.S. growth was heightened
on Wednesday after a survey of private-sector employment showed
a surprise contraction in September, which further unsettled
investors ahead of Friday's key employment report.
"With expectations for quantitative easing high, data
monitoring between now and the Nov. 3 (Fed policy setting)
meeting becomes even more significant," wrote UBS analyst Edel
Tully in a note.
"The short-term direction of the U.S. dollar, and therefore
gold, will be influenced by tomorrow's U.S. payrolls data: a
positive or negative deviation from expectations will weigh
heavily on market thinking about quantitative easing prospects."
Spot silver <XAG=> hit a new 30-year high at $23.51 an
ounce, but later eased to $23.02, down from $23.13 on Wednesday.
Holdings in the iShares Silver Trust <SLV>, the world's
largest silver-backed, exchange-traded fund, rose to a fresh
record high of 9,944.14 tonnes.
The platinum group metals retained gains. Spot platinum
<XPT=> rose to $1,723, its highest since mid-May and was last up
0.5 percent on the day at $1,702.50, while palladium <XPD=> hit
a new nine-year peak at $602.50 and was last up nearly 3 percent
at $592.00.
(Additional reporting by Rujun Shen in Singapore; editing by
Keiron Henderson)
