* Dollar retreats 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 swung into positive
territory, recovering from the six-week low it hit earlier on
Friday, after a key U.S. payrolls report missed expectations,
sparking a retreat in the dollar.
Spot gold <XAU=> was bid at $1,376.55 an ounce at 1605 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.
The precious metal has recorded some hefty losses this week,
but in the absence of a rising dollar it remains underpinned by
uncertainty over the U.S. recovery, the prospect of inflation in
emerging markets, and concern over euro zone sovereign debt.
"We still think there is support for gold out there," said
David Wilson, an analyst at Societe Generale. "There is a
perception of growing inflationary pressure into next year,
which should remain supportive of gold."
"Our FX (team) are still expecting a weaker trend in the
dollar to return, which again should be supportive for gold," he
added. U.S. gold futures for February delivery <GCG1> rose $5.40
an ounce to $1,377.10.
The dollar pulled back from its near four-month high against
the euro on Friday as investors continued to debate the outlook
for the U.S. economy after data showing weaker-than-expected
jobs growth. []
The data showed non-farm payrolls increased 103,000, well
below economists' forecasts. []
"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 biggest weekly loss since July last year,
after a raft of better-than-expected U.S. data this week.
"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 of 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=> firmed to $29.09 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 $1,733.80 an ounce against $1,729,
while palladium <XPD=> was at $756.70 against $758.50.
(Reporting by Jan Harvey; Editing by Anthony Barker)
