* U.S. economy shed 651,000 jobs in Feb, data shows
* Dollar extends losses after U.S. non-farm payrolls data
* SPDR ETF holdings static, iShares sees outflow
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By Jan Harvey
LONDON, March 6 (Reuters) - Gold firmed on Friday as stock
markets reversed earlier gains to fall back into the red, but
trade was choppy in the wake of payrolls data showing the U.S.
economy shed more than half a million jobs in February.
Spot gold <XAU=> was at $940.50/942.50 an ounce at 1602 GMT
from $932.00 late in New York on Thursday. It touched a high of
$944.60 in immediately after the data, which was broadly in line
with expectations, before slipping to a low of $929.25.
U.S. gold futures for April delivery <GCJ9> on the COMEX
division of the New York Mercantile Exchange rose $14.70 to
$942.50 an ounce.
"Gold has reacted (positively) as a safe haven to equity
weakness," Peter Fertig, a consultant at Quantitative Commodity
Research in Germany, said.
The metal fluctuated after non-farm payrolls data that
showed the unemployment rate hit a 25-year high of 8.1 percent
in February. []
Initially it rose as the dollar weakened, before slipping
into the red as stocks climbed. However, renewed weakness in the
equity markets after a sell-off of big-cap technology shares has
boosted the metal back above $940 an ounce. []
"Gold is considered in the first instance at the moment an
insurance premium and a safe haven," Commerzbank analyst Eugen
Weinberg said. "It is the equity markets and risk aversion that
are moving the market."
The dollar extended losses against the euro after the
numbers showed the U.S. economy shed 651,000 jobs last month,
adding to concerns the recession is still deepening.
[]
A weaker dollar typically lifts gold, which is often bought
as an alternative asset to the currency. While the relationship
has recently weakened as both assets reacted to risk aversion,
it remains an important factor in the gold price, analysts said.
The underlying fundamentals of gold remain weak, however,
with jewellery demand slumping and scrap supply picking up.
Demand for gold in India, the world's largest market for the
precious metal, remained slack as international prices rose for
a second day on Friday, while selling of scrap stepped up as
gold holders cashed in after the recent price gains.
SELLERS
"There are no hopes of traders buying," said Haresh Acharya,
head of the bullion desk at Parker Agrochem Exports in
Ahmedabad. "Sellers are coming in in huge numbers."
Buying of gold-backed exchange traded funds was also
stagnant, with holdings of New York's SPDR Gold Trust <GLD>,
static for a fifth consecutive session.
But falling demand for gold jewellery is being balanced by
strong investment demand.
This is rising on fears over the longer-term implications of
the government's attempts to kick-start economic recovery,
partly by flooding banking systems with money via "quantitative
easing".
"The fundamental argument (for gold) is bolstered by the
currency implications of central banks' quantitative easing and
bank stocks' accelerating damage," CMC Markets currency
strategist Ashraf Laidi said.
"Investors' rising tendency for more frequent profit-taking
at these uncertain times is partly behind protracted pullbacks
in the metal, but not more than 10 percent, which only bolsters
the sustainability of the (upward) trend," he added.
Among other precious metals, spot silver <XAG=> was at
$13.40/13.46 an ounce from $13.22. Earlier it touched a one-week
high of $13.50.
Spot platinum <XPT=> firmed to $1,067.50/1,072.50 an ounce
from $1,058.50, while spot palladium <XPD=> rose to
$199.50/204.50 an ounce from $196, having earlier reached a
10-day high of $202.50.
(Editing by Sue Thomas)
