* Inverse link with dollar revived
* Coming Up: U.S. non-farm payrolls data on Friday
(Releads, adds comments, updates prices)
By Amanda Cooper and Jan Harvey
LONDON, Aug 5 (Reuters) - Gold retreated on Thursday, easing
from earlier highs near $1,200 an ounce, as the dollar pared
losses against the euro after Wall Street equities opened lower
in jittery trade ahead of Friday's U.S. payrolls data.
Spot gold <XAU=> was bid at $1,193.85 an ounce at 1427 GMT
against $1,194.60 late in New York on Wednesday, having earlier
risen as high as $1,199.55. December COMEX futures <GCZ0> were
last at $1,196.50 an ounce, showing a 60-cent gain on the day.
While the usual inverse relationship between gold and the
dollar loosened earlier this year as extreme risk aversion
benefitted both assets, it has since shown signs of becoming
reestablished.
"Gold is trying to trade inversely with the dollar, as it
has in the past," said Jeff Pritchard, an analyst at Altavest
Worldwide Trading.
"Gold has been trading like a currency, with the dollar," he
said. "That might be reversing if there is some sort of clarity
within the market. If we can avoid panic, I think things will
start going back to normal in that relationship."
Gold benefited in earlier trade from gains in the euro
<EUR=> against the dollar, after European Central Bank President
Jean-Claude Trichet said incoming third-quarter economic data
showed stronger-than-expected euro zone growth. []
However, it struggled to maintain those gains as U.S. stock
markets opened in the red, with traders remaining nervous ahead
of key U.S. non-farm payrolls data due on Friday. Gold
surrendered gains in its wake. [] []
Signs of fresh weakness in the U.S. economy reflected in the
payrolls numbers could ultimately benefit gold, however,
analysts said. "Any insecurity in the markets definitely brings
people to (gold)," said Pritchard.
PAYROLLS EYED
Economists polled by Reuters estimated that U.S. nonfarm
payrolls shed 65,000 jobs in July as layoffs of federal census
workers continued. []
"We've said for months that $1,250 might be the top. We
haven't really seen anything to make us depart from that in the
last month or so," said Citi analyst David Thurtell.
"We can get back up there if, say, worries emerge about the
U.S. fiscal situation."
There has been intense speculation in the fixed income
markets that the Federal Reserve will embark on a fresh
bond-buying programme to ensure interest rates remain at their
current low levels for some time, an environment that would be
beneficial to gold, which does not offer any yield.
"It's still a very tricky market to call on the near term. I
suppose the positive sign for gold now is that it has held up
some pretty heavy selling pressure towards $1,150," said Mark
Pervan, senior commodities analyst at ANZ in Melbourne.
Holdings of the world's largest gold exchange-traded fund,
the SPDR Gold Trust <GLD>, fell for a seventh day to 1,281.8
tonnes. Holdings hit a record 1,320.436 tonnes on June 29.
[]
Silver <XAG=> was up about 0.7 percent on the day to $18.37
against $18.25 in New York on Wednesday. It shrugged off a
decline in holdings of the largest silver ETF, the iShares
Silver Trust <SLV>.
Platinum <XPT=> was bid at $1,567.50 an ounce versus $1,577,
while palladium <XPD=> was at $490.50 versus $494.00. Workers at
South Africa's Impala Platinum <IMPJ.J> were voting on possible
strike action at the world's second-largest platinum producer.
(Additional reporting by Lewa Pardomuan in Singapore; Editing
by Alison Birrane and Sue Thomas)
