* 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 comment)
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, and as
disquiet over the outlook for economic growth persisted.
Spot gold <XAU=> was bid at $1,249.55 an ounce at 1331 GMT,
against $1,248.04 late on Friday. U.S. gold futures for December
delivery <GCZ0> firmed 60 cents to $1,251.70. Trading is set to
be muted during the U.S. Labor Day holiday, analysts said.
A report on Friday showing U.S. payrolls declined by less
than expected last month knocked gold briefly lower, though
prices proved resilient in later trade. The data is continuing
to support equity markets and higher-yielding currencies.
"Gold has done quite well given what has gone on in the
currencies (and) equities," said Michael Lewis, head of
commodities research at Deutsche Bank.
"We still like the bullish gold view. There is no interest
rate support for the dollar so the dollar will fall, real rates
will remain low, equity markets, even when they go up, are still
a bit skittish."
The dollar dipped on Monday and looked set to test a 15-year
low against the yen after shedding gains made after U.S. jobs
data, while greater appetite for risk prodded the euro to a
three-week high versus the U.S. currency. []
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. [] []
Meanwhile gold demand in India was solid, dealers reported,
after the rupee rose to a two-week high, making dollar-quoted
assets cheaper for local buyers. []
"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."
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.
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. []
But gains in base metals 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 $1,557.85 an ounce against
$1,553.40 and palladium <XPD=> at $525 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 $19.88 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)
