* Dollar fluctuates vs euro after non-farm payrolls data
* U.S. December non-farm payrolls rise less than expected
* Indian gold imports seen jumping 64 pct in 2010
* Official says China's 2010 gold output hit record
(Updates prices, adds comment)
By Jan Harvey
LONDON, Jan 7 (Reuters) - Gold pared losses, recovering from
the six-week low it hit earlier Friday, after a closely watched
U.S. payrolls report missed expectations, sparking initial
losses in the dollar and a fresh wave of risk aversion.
Spot gold <XAU=> was bid at $1,367.61 an ounce at 1417 GMT
against $1,371.15 late in New York on Thursday, having earlier
touched a low of $1,352.30 an ounce, its weakest since Nov. 26.
Trade was choppy as the foreign exchange markets see-sawed,
with the dollar soon moving back into the black versus the euro,
and gold's recovery was muted.
"The report did not spring any major surprises, which
initially led to a bit of short covering," said Saxo Bank senior
manager Ole Hansen.
"However, the dollar remains bid and silver is under some
considerable pressure, so do not expect much upside this side of
the weekend."
The dollar initially dropped on Friday in volatile trade
after the report showed fewer U.S. jobs than expected were
created in December. It then quickly strengthened to a fresh
four-month high against the euro, but again retreated. []
The data, which showed non-farm payrolls increased 103,000,
well below economists' forecasts, suggested the Federal Reserve
will complete its asset buying programme. The unemployment rate
dropped to its lowest in more than 1-1/2 years. []
"Wall Street traders and investors have become accustomed to
link an improved consumer wealth effect with job creation; but,
unfortunately, today's data proves that synergy is absent
between them," said Todd Schoenberger, managing director of
Landcolt Trading.
"What is painfully obvious is the main mission of both
quantitative easing packages is failing. The intent of improving
the wealth effect while stimulating job growth is not working."
WORST WEEK
Notwithstanding a further rise, gold prices are still
heading for their worst weekly loss since the second quarter of
last year, after a raft of better-than-expected U.S. data.
"The United States has had a whole run of decent data, and
that has increased risk appetite and decreased gold's allure as
a hedge," said VM Group analyst Carl Firman.
"If you have a sustained period of good, positive U.S. data,
which points towards a good U.S. recovery, the dollar is bound
to strengthen slightly, and that is generally negative for the
gold price," he added
Elsewhere the head of the Bombay Bullion Association told
Reuters on Friday that gold imports to India, the world's
largest consumer, are likely to jump 64 percent to 500-550
tonnes in 2011, driven by investment purchases. []
Gold-backed exchange-traded funds continued to see outflows,
with holdings of the largest, New York's SPDR Gold Trust <GLD>,
falling to a seven-month low on Thursday. []
In supply news, China, the world's biggest gold producer,
said its output the metal rose more than 9 percent in the first
eleven months of 2010 from the year before, and was expected to
top a record 340 tonnes in the full year. []
Silver <XAG=> dropped to $28.82 an ounce from $29.04, having
earlier hit its lowest since mid-December at $28.30 an ounce.
Holdings in the world's largest silver-backed ETF, the
iShares Silver Trust <SLV>, fell to 10,892.87 tonnes on Jan 6
from 10,917.19 tonnes a day before. []
Platinum <XPT=> was at $1,730.24 an ounce against $1,729,
while palladium <XPD=> was at $750.22 against $758.50.
(Reporting by Jan Harvey; Editing by Alison Birrane)
