* Gold could rise, hold $1,000 if it weathers profit-taking
* SPDR Gold holdings <XAUEXT-NYS-TT> down 0.04 percent
By Miho Yoshikawa
TOKYO, Sept 7 (Reuters) - Gold futures dipped a touch but
still hovered just below $1,000 on Monday in buying linked to a
weaker dollar and fears about inflation.
The precious metal rallied last week amid prospects for falls
in stock markets and worries about inflation, with central banks
pumping money into their economies to help fight the global
recession.
Gold prices were largely unchanged, however, after the U.S.
Labor Department reported on Friday that closely watched nonfarm
payrolls for August showed the smallest decline in a year.
The unemployment rate jumped to a 26-year high of 9.7
percent.
Many market participants thought gold would be hit by
near-term profit-taking after last week's rally, with prices
climbing by more than 4 percent during the week to hit a peak of
$999.50 on Thursday.
That was the highest level since February, the last time it
topped $1,000.
"The volumes last week that saw it rise were relatively low
... and you might have thought it would be a fragile rise to
these lofty peaks," said Darren Heathcote, head of trading at
Investec Australia.
U.S. gold futures for December delivery <GCZ9> were at $994.0
per ounce at 0248 GMT, after settling down $1 at $996.70 on
Friday. They hit an intraday peak of $998.40.
Gold <XAU=> stood at $992.0 per ounce, down 0.1 percent
compared to the New York notional close of $993.40.
"The market considers that we could be looking at more
inflation," Heathcote said.
Gold is seen as a hedge against inflation, which erodes the
value of paper assets.
Heathcote said a weaker dollar was also supporting gold.
The precious metal often moves in the opposite direction to
the dollar, as it is seen as an alternative to holding the U.S.
currency.
A weaker dollar also boosts gold for investors holding other
currencies, since the precious metal is dominated by the
greenback.
Japan's Nikkei average climbed 1 percent on Monday. []
U.S. stocks closed higher on Friday as investors focused on
the bright side of a mixed payrolls report that showed
smaller-than-expected job cuts in August. []
The dollar and the yen were subdued in early trade on Monday,
while commodity-linked currencies were strong near highs as
investors chose to focus on the brighter side of a mixed U.S.
payrolls report.
Looking ahead, Heathcote said there was a chance for gold to
reach and sustain the $1,000 level if it manages to weather a
round of profit-taking.
Gold futures closed at $1,004.50 in late February.
If profit-taking was not sufficiently heavy, there was a good
chance gold would recover and break through $1,000 again,
Heathcote said.
Traders said it could be a relatively quiet day with New York
commodity markets closed on Monday due to the U.S. Labor Day
holiday.
In a sign of possible falling investor interest, the world's
largest gold-backed exchange-traded fund, the SPDR Gold Trust
<GLD>, said holdings stood at 1,077.63 tonnes as of Sept. 4, down
0.38 tonnes or 0.04 percent from the previous business day.
[]
PRICES
Precious metals prices at 0246 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 991.80 -1.60 -0.16 12.69
Spot Silver 16.16 -0.04 -0.25 42.76
Spot Platinum 1262.00 9.50 +0.76 35.41
Spot Palladium 290.50 0.50 +0.17 57.45
TOCOM Gold 2980.00 26.00 +0.88 15.82 33905
TOCOM Platinum 3790.00 30.00 +0.80 42.91 7332
TOCOM Silver 484.70 6.10 +1.27 51.80 173
TOCOM Palladium 875.00 1.00 +0.11 59.09 104
Euro/Dollar 1.4327
Dollar/Yen 93.12
TOCOM prices in yen per gram, except TOCOM silver which is priced
in yen per 10 grams. Spot prices in $ per ounce.
(Editing by Michael Watson)
