(Updates prices)
By Pratima Desai
LONDON, June 6 (Reuters) - Gold jumped on Friday as the
dollar fell against the euro after data showed a sharp rise in
the U.S. unemployment rate and equity markets slipped on worries
about economic growth.
Gold <XAU=> rose more than two percent to $895.45 a troy
ounce and was at $889.00/890.00 at 1408 GMT compared with
$874.55/875.95 late in New York on Thursday, when it hit $864.45
-- its lowest level since May 15.
U.S. employers shed jobs for a fifth straight month in May
and the unemployment rate jumped to its highest in more than
3-1/2 years, a Labor Department report showed. []
"Gold rallied in line with moves down in the dollar. The
worry is if unemployment is climbing, then mortgage defaults and
subprime losses rise," said David Thurtell, analyst at BNP
Paribas.
U.S. unemployment rose to 5.5 percent in May from 5 percent,
its highest since Oct. 2004. Some 49,000 jobs were cut from
payrolls in May, up from a revised 28,000 that were lost in
April.
"The news is bearish for equities -- so gold benefits as an
alternate asset class," Thurtell said. []
Gold is traditionally used as a hedge against financial
uncertainty, which often manifests itself in dollar weakness. It
also makes commodities priced in the U.S. currency cheaper for
holders of other currencies.
GOOD DAY
Also weighing on the dollar and boosting the euro and
precious metals was a speech by European Central Bank president
Jean-Claude Trichet on Thursday.
Trichet said the central bank was on high alert over
inflation and that the governing council could raise rates as
soon as its next policy meeting on July 3.
Euro rates currently at 4.0 percent are two percent above
those in the United States. Higher ECB rates would make it even
more profitable for investors to hold euros rather than dollars.
"Its going to be a good day for gold. Essentially it's
hostage to the dollar," said Nick Moore, analyst at ABN Amro.
Platinum <XPT=> rose to $2,060 an ounce, the highest since
May 29. It was last at $2,038/2,058 an ounce from
$2,000.50/2,020.50 an ounce on Thursday.
Platinum hit a record high of $2,290 an ounce on March 4 as
worries about supplies from South Africa mounted. South Africa
is the world's largest producer of the industrial metal used in
autocatalysts.
"South African power shortages are keeping the platinum
market on edge as a swift resolution to the structural problems
looks far from near," Barclays Capital said in a note.
"We see further upside potential in prices as platinum
supplies are heavily dependent on South Africa and the delicate
power supply situation as well as mine safety concerns leave
mine output extremely susceptible to potential disruptions."
Silver <XAG=> was a touch higher at $17.24/17.29 an ounce
from $17.12/17.18 an ounce on Thursday. Spot palladium <XPD=>
was up at $426/434 an ounce from $421.00/429.00 an ounce.
(Additional reporting by Chloe Fussell)
(Reporting by Pratima Desai; editing by Peter Blackburn)
