* U.S. payrolls data eventually pressures dollar
* Concerns on U.S. economy boost gold's safe-haven status
* SPDR Gold holdings <XAUEXT-NYS-TT> steady
(Updates prices, adds detail/comment)
By Humeyra Pamuk and Michael Taylor
LONDON, Oct 2 (Reuters) - Gold erased initial losses to rise
above $1,000 on Friday, reflecting a spike and subsequent
retreat in the dollar, as investors fretted over news of deeper
than expected U.S.job losses in September.
U.S. employers cut a heftier-than-expected 263,000 jobs,
lifting the unemployment rate to 9.8 percent, according to a
government report. []
Gold <XAU=> slipped below $987 on the initial jobs news and
then moved up to $1,006.20 an ounce at 1435 GMT, compared with
$998.50 an ounce quoted late in New York on Thursday.
Bullion rose to an 18-month high of $1,023.55 an ounce in
September, in sight of the March 2008 record high of $1,030.80
an ounce.
"It's dollar related and has tracked it very closely," said
David Thurtell an analyst at Citigroup. "There are also still
enough people who are worried enough about the economic outlook
out there, to warrant good, ongoing demand for gold."
"The data wasn't a great surprise for the market," he added.
"Worse than expected, but not much worse than the new
expectations."
The weaker non-farm payrolls renewed fears about recovery in
the world's largest economy and briefly bolstered the dollar,
seen as a safe haven. []
Gold is often viewed as an alternative to holding the dollar
and benefits from weakness in the U.S. currency, which makes it
more affordable for those buying in other currencies.
But heavy long positions built up in the market made bullion
vulnerable to a correction, traders said.
The non-commercial net long position in gold futures on the
COMEX division of the New York Mercantile Exchange stood at an
all-time high of 236,749 lots for the week ended Sept. 22,
figures from the Commodity Futures Trading Commission showed.
U.S. gold futures for December delivery <GCZ9> were at
$1,007.3 an ounce, versus Thursday's $1,000.7 on the COMEX
division of the New York Mercantile Exchange.
HEAVY LONGS
"We would look for gold to hold the $985-1,020 area but gold
remains at risk to a deeper correction as falling risk appetite
could spook some of the recently added fund longs," James Moore
at Thebulliondesk.com said in a research note.
Moreover, several traders said there was insufficient
support for gold from the physical side.
"Supply and demand fundamentals are capping the gold price.
Scrap is becoming more available and jewellery demand goes down
every time the price goes up," said Tony Parry, a gold analyst
at Sydney-based Resource Capital Research.
The economic downturn and high prices this year have knocked
down demand for gold in Turkey, one of the top consumers of
bullion, which is now heading for the lowest ever recorded
annual import levels.
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said its holdings stood at 1,095.327
tonnes on Oct. 1, unchanged from the previous business day.
[]
Among other precious metals, silver <XAG=> was higher at
$16.39 from $16.32.
Platinum <XPT=> was at $1,275.50 from $1,277.5 and palladium
<XPD=> was at $292.50 from $287.50
(Reporting by Michael Taylor; editing by Anthony Barker)
