(Updates with quotes, prices after U.S. jobs data)
By Atul Prakash
LONDON, May 2 (Reuters) - Gold sank to a four-month low on
Friday after the dollar jumped following better-than-expected
U.S. jobs data, but the metal rebounded when the price dipped
below $850 an ounce and attracted fresh buyers, analysts said.
Gold <XAU=> fell as low as $845 an ounce before rising to a
high of $856.60. It was quoted at $853.90/854.90 at 1302 GMT
against $850.25/851.65 in New York late on Thursday.
"The market was sold on the figures because the dollar
strengthened dramatically, but there was no follow-through
selling and in fact there was some good underlying interest
below the $850 level," said David Holmes, director of metals
sales at Dresdner Kleinwort.
"If we manage to hold above $850 on the close, then I think
that's relatively positive," he added.
The dollar jumped to two-month highs versus the yen and
against a basket of currencies after data showed the U.S.
economy lost just 20,000 jobs in April, fewer than economists
had forecast.
The report bolstered expectations that the Federal Reserve
is nearing the end of its rate-cutting cycle. It also backed a
growing view that the U.S. economic slowdown may not be as deep
as some originally thought.
A firmer dollar makes gold costlier for holders of other
currencies and often lowers bullion demand. The metal is also
generally seen as a hedge against oil-led inflation.
Oil rebounded above $113 a barrel after three straight days
of falls, as concerns about fresh Turkish assaults in northern
Iraq outweighed worries about supplies and a firmer U.S. dollar.
Turkish warplanes launched intensive bombing raids on
Kurdish rebels in northern Iraq overnight on Thursday, but there
were no reports about casualties or any impact on oil output
from the region. []
"The $850 level, which is also 1980's record high, should
hold. But if it is broken convincingly, then the whole precious
metals complex might go down further," said Wolfgang
Wrzesniok-Rossbach, head of sales at Heraeus, a German precious
metals trading group.
"People are perhaps looking elsewhere, such as equities. It
seems gold is not the flavour of the day."
Gold held in New York-listed StreetTRACKS Gold Shares
<XAUEXT-NYS-TT>, the world's largest gold-backed exchange-traded
fund, fell to 580.45 tonnes as of Wednesday, shedding nearly 10
percent of its holdings in the last 10 days.
In other markets, U.S. gold futures rose, with the June
contract <GCM8> rising $2.20 an ounce to $853.10.
Platinum <XPT=> rose to $1,870/1,880 an ounce from
$1,860.50/1,880.50 late on Thursday, while palladium <XPD=> was
up $2 at $408/413 an ounce. Silver <XAG=> rose to 16.24/16.30 an
ounce from $16.16/16.22.
(Reporting by Atul Prakash; editing by Peter Blackburn)
