* Gold hit after jobless claims, dollar rise
* Investors take profits ahead of Friday's payrolls report
* Coming up: U.S. nonfarm payrolls; Oct 8, 1230 GMT
(Recasts, updates comment, prices, adds second byline/dateline,
previously LONDON)
By Frank Tang and Amanda Cooper
NEW YORK/LONDON, Oct 7 (Reuters) - Gold retreated 2.5
percent from a new record high on Thursday, as upbeat news on
U.S. jobless benefits shored up the dollar and prompted gold
longs to secure profits before Friday's U.S. employment
report.
New U.S. claims for unemployment benefits, a precursor to
Friday's September Labor Department nonfarm payrolls report,
fell to a near three-month low last week, decreasing gold's
appeal as a safe-haven investment.
"People just want to take some profits off the table before
the nonfarm payrolls report. The gold market has been overdone,
and we have gone so far in such a short period of time, so a
correction is inevitable," said Bruce Dunn, vice president of
trading at Auramet Trading LLC.
But even as gold looked headed to its biggest percentage
loss since Late July, its price was set for the fourth straight
week of gains.
Thursday's relatively upbeat report did not change
perceptions the Federal Reserve will roll out a new asset
purchasing program as early next month to keep interest rates
low and support the economic recovery, a process known as
quantitative easing. Such an injection of money would be aimed
at preventing nascent deflation by stimulating modest
inflation, which benefits gold as a hedge. []
Spot gold <XAU=> fell 1.2 percent to $1,330.15 an ounce at
12:44 p.m. EDT (1644 GMT), and was off 2.5 percent from its new
high of $1,364.60 set earlier in the day, as the euro
initially rose to an eight-month high above $1.40.
U.S. gold futures for December delivery <GCZ0> were down
$16.20 at $1,331.50.
The dollar is down 7 percent against a basket of currencies
in the last month, as the market prepares for the Fed to resume
quantitative easing now that the Bank of Japan announced its
own modest easing.
Gold, has gained as much as 10 percent in the same period,
with its inverse correlation with the dollar appearing to
strengthen.
However, gold was hit as the dollar recovered against the
euro as investors bet that Europe's common currency rose too
far, too fast. []
In euros <XAUEUR=R> gold is up less than 1 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 more than 1 percent. (Graphic:
http://r.reuters.com/xeg27p)
"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.
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.
"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," UBS analyst Edel Tully wrote in a note.
Economists polled by Reuters are expected Friday's nonfarm
payrolls to be little changed.
On a supportive note for physical gold, state media in
Vietnam reported that the major Asian bullion consumer would
grant licenses and quotas to import gold, which was banned in
mid-2008 as policymakers attempted to tackle the country's
trade deficit. []
Spot silver <XAG=> hit a new 30-year high at $23.51 an
ounce. It later fell 2.5 percent to $22.55.
The platinum group metals were both higher. Spot platinum
<XPT=> rose to $1,725.50, its highest since mid-May and was
trading up 0.5 percent on the day at $1,702.50, while palladium
<XPD=> hit a new nine-year peak at $602.50, and it gained 1.2
percent to $585.50.
Prices at 12:53 p.m. EDT (1653 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCZ0> 1333.40 -14.20 -1.1% 21.6%
US silver <SIZ0> 22.630 -0.413 -1.8% 34.3%
US platinum <PLF1> 1705.50 -6.50 -0.4% 15.9%
US palladium <PAZ0> 588.30 -1.35 -0.2% 43.9%
Gold <XAU=> 1332.35 -13.40 -1.0% 21.5%
Silver <XAG=> 22.62 -0.51 -2.2% 34.3%
Platinum <XPT=> 1701.50 6.50 0.4% 16.1%
Palladium <XPD=> 589.00 10.25 1.8% 45.3%
Gold Fix <XAUFIX=> 1345.00 -14.50 -1.1% 21.8%
Silver Fix <XAGFIX=> 23.38 46.00 2.0% 37.6%
Platinum Fix <XPTFIX=> 1723.00 3.00 0.2% 17.5%
Palladium Fix <XPDFIX=> 598.00 3.00 0.5% 48.8%
(Additional reporting by Rujun Shen in Singapore)
