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By Frank Tang and Anna Ringstrom
NEW YORK/LONDON, April 3 (Reuters) - Gold ended higher on
the back of a platinum rally on Thursday, with investors eyeing
Friday's U.S. jobs report which may determine the metal's
short-term direction.
"I think it (gold's surge) has a lot to do with platinum
actually. We have resurging worries about electricity supply
after yesterday's discussion by Eskom. Clearly, the situation
remains problematic," said James Steel, metals analyst with
HSBC in New York.
"In addition to that, the dollar dropped a little today,
and the fact that all commodities are up have driven the gold
higher."
Platinum finished 2 percent higher on Thursday on lingering
worries that South Africa's state utility could not meet the
electricity demand from precious metals miners.
Spot gold <XAU=> was at $903.40/904.20 at 2:15 p.m. EDT
(1815 GMT), up from $898.00/898.70 late in New York on
Wednesday, when it rose 1 percent.
Earlier in the session it fell as low as $889.30 as the
dollar initially strengthened on better-than-expected U.S.
service sector data. [].
U.S. gold futures for June delivery <GCM8> on the COMEX
division of the New York Mercantile Exchange settled up $9.40,
or 1 percent, to $909.60 an ounce.
"The nonfarm payrolls data tomorrow and the Fed meeting
later this month are likely to give direction," said Suki
Cooper, metals analyst at Barclays Capital.
Cooper said the overall environment for gold was positive
but said she would not rule out a correction in the short term.
"Prices are still very high, even after a correction recently,"
she said.
Standard Bank said in a note that after a resistance level
at $904 it saw secondary resistance at $912. "A break higher
might see gold test $920," it said.
U.S. PAYROLLS
Data anticipated for a steer on the likely outcome of
Friday's U.S. jobs report had little effect on gold prices.
"We're in a little bit of a holding pattern at the moment,"
said Tom Kendall, metals analyst at Mitsubishi Corp.
Friday's report, expected to show that the economy shed
jobs in March for a third straight month, will be watched for
clues about U.S. rate moves. Lower rates boost gold's appeal as
an alternative investment, and vice versa.
"That report can certainly move the markets substantially
on Friday," Kendall said.
The U.S. Federal Reserve has cut its benchmark interest
rate six times since September to 2.25 percent from 5.25
percent.
Analysts at Dresdner Kleinwort said in a research note the
potential for further rate cuts was limited. "Gold as well as
other markets might have got a bit too optimistic," they said.
Gold has rebounded almost 4 percent since falling to a
two-month low of $872.90 on Tuesday, but it was still well
below a record high of $1,030.80 hit on March 17.
Cooper said physical demand in India, the world's No. 1
gold consumer, might also help support prices.
In other precious metals, platinum <XPT=> rose 2 percent on
supply concerns, but stayed below a record $2,290 hit on March
4.
Platinum rose to $1,985/1,995 an ounce from its Wednesday
U.S. close of $1,942/1,952 on worries South Africa's power
crisis, which has disrupted mining, may last many years unless
electricity demand is reduced. []
Silver <XAG=> rose to $17.34/17.39 an ounce from its late
New York finish of $17.17/17.22, while palladium <XPD=> was
essentially flat at $436/441 an ounce.
