* Gold rallies on softer dollar but falling oil caps gains
* Investors eye non-farm payrolls data due Friday
* Platinum, palladium also end higher
(Recasts, updates with analyst comments, closing prices, market
activity, adds NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, July 31 (Reuters) - Gold ended higher on
Thursday, having rallied 2 percent earlier in the session as
the dollar dropped after weaker-than-expected U.S. jobs data,
but oil weakness crimped bullion's gains.
Gold <XAU=> was at $913.45/914.65 by New York's last quote
at 2:45 p.m. EDT (1845 GMT), compared with $907.20/908.40 an
ounce late in New York on Wednesday.
Traders are awaiting key U.S. data, including U.S. non-farm
payrolls numbers due on Friday morning, to set fresh direction
to trade.
"The employment numbers are always the biggest piece of data
out," HSBC analyst James Steel said. "That is going to be a
determining factor tomorrow."
Gold prices rallied sharply earlier in the session as the
dollar slipped after data showed an unexpected rise in U.S.
weekly jobless claims, and as second-quarter GDP numbers came
in softer than expected. []
Bullion also boosted after European Central Bank sources
told Reuters on Wednesday that the ECB will raise interest
rates again if inflation keeps rising, despite faltering
economic growth. []
Bill O'Neill, managing partner of LOGIC Advisors in New
Jersey, said that a slew of U.S. and European inflation data,
including the core inflation reading in the U.S. GDP report,
showed that inflation was still rising fast.
The precious metal touched a session high of $925.20 as
investors bought into gold as an alternative to the dollar.
However, a sharp drop in oil prices to below $125 a barrel
knocked gold from its earlier highs. Bullion typically moves in
line with crude, as it is often bought as a hedge against
oil-led inflation.
"The only reason gold is off the high is because of this
sudden weakness in oil," noted Steel.
U.S. gold futures for December delivery <GCZ8> settled up
$10.40, or 1.1 percent, at $922.70 an ounce on the COMEX
division of New York Mercantile Exchange.
The Chicago Board Options Exchange, the largest U.S.
options market, said on Thursday that it will roll out a new
benchmark, the CBOE Gold Volatility Index <.GVZ>, which tracks
projected volatility in gold prices. []
PGMs RECOVER
Platinum and palladium, both largely used by carmakers as a
component in autocatalysts, ticked up on Thursday, having
slipped in gold's wake in the previous session.
Spot platinum <XPT=> ended higher at $1,750.50/1,770.50 an
ounce, up from $1,725.00/1,745.00 late in New York on
Wednesday.
"The slump in platinum has brought out the buyers and the
metal has found support in the low $1700s/oz," said UBS analyst
John Reade in a note.
"We believe that platinum is now attractively priced and
that investors looking to buy good amounts should scale into
platinum at current levels."
Spot palladium <XPD=> finished at $378.00/386.00 an ounce,
up from $371.50/379.50 late in New York. Silver <XAG=> ended
higher at $17.71/17.77 an ounce from its previous finish of
$17.50/17.56.
The iShares Silver Trust <SLV.A>, the largest physically
backed silver exchange-traded fund traded in New York, said its
holdings rose above 200 million ounces for the first time on
July 29. []
(Editing by Matthew Lewis)
