* Better jobs data lifts commods appetite
* Physical demand emerges
* Coming up: U.S. U.Mich consumer sentiment; 1455 GMT
(Updates prices, adds details)
By Amanda Cooper
LONDON, Dec 9 Reuters) - Gold edged up on Thursday after an
upbeat report on the U.S. jobs market encouraged some investor
risk appetite, which in turn knocked the dollar in favour of
higher-yielding currencies and commodities.
Data showing initial weekly jobless claims fell last week by
more than expected triggered more optimism over the outlook for
growth in the world's largest economy. [] []
While this would normally boost the dollar and undermine
gold, the push into hard assets such as metals and crude oil
helped lift bullion prices.
Indeed, this week's quarter-point rise in 10-year Treasury
yields to six-month highs has boosted the dollar and unnerved
investors over the near-term economic impact of Washington's
plans to extend a series of tax cuts.
Gold has come under pressure as the dollar has benefited
from greater yield appeal and the perception that U.S.
government efforts will result in longer-term growth. The metal
is set for its largest weekly fall since late October, having
hit record highs earlier this week.
Spot gold <XAU=> was last quoted at $1,388.20 an ounce at
1402 GMT, up 0.5 percent on the day, having fallen for two
consecutive days away from Tuesday's $1,430.95 record high.
U.S. February gold futures <GCG1> reversed earlier losses to
rise $5.8 an ounce to $1,388.80.
"The bias is certainly towards risk-on again and it's a
function of having a couple of points of (U.S. economic) growth
added on because of the extension of the...tax cuts," said
Daniel Brebner, a strategist at Deutsche Bank.
"There's certainly lots of risk around, debt is becoming an
issue in both Europe and the U.S. but right now, the
macroeconomic policy is towards growth and I think the market is
reflecting that."
The so-called opportunity cost of owning gold -- the yield
investors forfeit for holding a non-interest bearing asset --
rises in tandem with bond yields and investors have seen that
cost automatically spiral this week as Treasuries have fallen.
The pressure on Treasuries resumed on Thursday after weekly unemployment data showed the four-week moving average of initial jobless claims held at two-year lows.
NEAR RECORD
Gold hit its peak on Tuesday, fuelled by a flurry of
fund-buying ahead of the year-end and a resurgence in risk
aversion stemming from Europe's deepening debt crisis, which has
pummelled the government bonds of the euro zone's most
economically fragile members.
With the 3 percent decline seen over the last three days
however, physical demand has resurfaced, particularly in Asia,
where premiums for physical delivery in Hong Kong held steady,
while scrap supply was muted.
"Stabilization Thursday has been due in large part to
impressive physical demand, with very decent buying across Asia
yesterday," wrote UBS strategist Edel Tully in a note.
"In India alone, our physical sales made Wednesday one of
the top ten days this year, with demand accelerating once gold
fell below $1,390. This should provide longs with some comfort."
Reflecting the lack of appetite for gold this week was a
fourth successive decline in holdings of metal in the SPDR Gold
Trust <GLD>, the world's largest exchange-traded fund backed by
physical bullion. []
Spot silver <XAG=> rallied 1.2 percent to $28.68 an ounce,
after declining to a one-week low of $27.96 on Wednesday.
Platinum <XPT=> rose 0.4 percent to $1,686.74 an ounce,
while palladium <XPD=> rose 2.4 percent to $741.22, taking some
heart from the rise in other industrial commodities such as
crude oil and base metals. [] []
(Additional reporting by Rujun Shen in Singapore; editing by
Keiron Henderson)
