* Gold supported by weak U.S. jobs data in February
* Retracement possible in an overbought gold market
* GLD holdings static, iShares sees outflow
(Recasts, updates with quotes, closing prices, adds NEW YORK
to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, March 6 (Reuters) - Gold ended higher on
Friday as stock markets reversed initial 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.
The metal fluctuated widely after U.S. non-farm payrolls
data that showed the unemployment rate hit a 25-year high of
8.1 percent in February. []
"It's a mixture of fear and worry that the recession and
credit deflation are going to take gold price lower," said
Thomas Winmill, portfolio manager of Midas Fund <MIDSX.O> in
New York.
Spot gold <XAU=> was at $937.95 an ounce at 2:23 p.m. EST
(1923 GMT), up 0.6 percent from its last quote $932.00 in New
York late Thursday. Bullion reached a session high of $944.60
immediately after the jobs report.
U.S. gold futures for April delivery <GCJ9> settled up
$14.90, or 1.6 percent, at $942.70 an ounce on the COMEX
division of the New York Mercantile Exchange.
"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."
However, fund managers said that prices could consolidate
further due to weak jewelry demand and as short-term traders
take profits after a sharp rally driving gold to above $1,000
an ounce on Feb. 20.
"At this time of the year, there is very little fundamental
demand from jewelry fabrication. I will be concerned that there
is too much speculative flow in the gold market at this time,"
Winmill said.
The dollar extended losses against the euro after the U.S.
job report added 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.
STALE ETF BUYING
Buying of gold-backed exchange traded funds was also
stagnant, with holdings of New York's SPDR Gold Trust <GLD>,
commonly known as GLD, remained static for a fifth consecutive
session.
But falling demand for gold jewelry 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."
Among other precious metals, spot silver <XAG=> at $13.28
an ounce, up 0.5 percent from its Thursday finish. Earlier it
touched a one-week high of $13.50.
Spot platinum <XPT=> at $1,065.00 an ounce, up 0.6 percent
from its previous close of $1,058.50, while spot palladium
<XPD=> was at $200.50 an ounce, up 2.3 percent from its late
Thursday New York quote of $196, having earlier reached a
10-day high of $202.50.
(Editing by Christian Wiessner)
