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By Frank Tang and Atul Prakash
NEW YORK/LONDON, April 4 (Reuters) - Gold gained in choppy
trade on Friday as an oil rally and weaker-than-expected U.S.
jobs data pushed the dollar down and lifted gold's appeal as an
alternative investment.
But analysts cautioned that gold could slide further after
tumbling last week to a two-month low.
Gold <XAU=> rose as high as $914.40 an ounce after the
data, and was last at $908.40/909.20 by 2:15 p.m. EDT (1815
GMT), up from $903.40/904.20 late in New York on Thursday, when
it gained more than $5.
"Gold is following the foreign exchange market and we
expect the market volatility to continue. On the technical
side, the upside trend is broken and we may head to the
downside now," said Michael Kempinski, senior metals trader at
Commerzbank.
"We saw heavy long liquidation last week, but the general
position of the funds are still long here."
The dollar slipped after government data showed U.S.
employers cut payrolls for a third month in a row in March,
slashing 80,000 jobs for the biggest monthly job decline in
five years as the economy headed into a downturn.
Pradeep Unni, assistant vice president of Vision
Commodities in Dubai, told clients in a note that the U.S. job
market was seriously strained and slower growth was expected
until the middle of 2008.
"What has this to offer for gold is the continuing weakness
in dollar and extended gains in gold," Unni said..
A weaker dollar makes gold cheaper for holders of other
currencies and often lifts bullion demand. The metal also is
generally seen as a hedge against oil-led inflation.
Inflation worries boosted gold as U.S. crude <CLc1> ended
up $2.40 at $106.23 a barrel.
On Tuesday, gold slid to a two-month low of $872.90 an
ounce on fund selling before staging a modest rebound. It
remained 12 percent lower than last month's lifetime high of
$1,030.80. Dealers said jewelers bought at the lows.
U.S. gold futures for June delivery <GCM8> settled up $3.60
at $913.20 an ounce.
"In the coming days, gold should trade in a wide range
between $850-$950 an ounce. Whether gold will test the upper
end of this range will depend on it going through and holding
gains above the $910-$920 level," said Wolfgang
Wrzesniok-Rossbach, head of sales at German precious metals
trading group Heraeus.
PLATINUM SEEN SUPPORTED
Platinum <XPT=> rose to $2,005/2,015 from its U.S. finish
of $1,985/1,995 an ounce on Thursday, when it rose more than 2
percent on worries that South Africa's state utility could not
meet electricity demand from precious metals miners.
"The ongoing power supply concerns impacting South African
production continue to underpin prices," Barclays Capita said
in a daily market report.
Implats, the world's second biggest platinum producer, said
South Africa did not boost its power allotment to 95 percent
from 90 percent. []
Government officials said on March 6 that mines would be
able to increase their power consumption to 95 percent of
normal use but the company said not all mines got the higher
allotment.
South Africa's power crisis may last many years unless
there is a sustained drop in electricity demand in Africa's
largest economy, state power utility Eskom [] said this
week.
Supply worries, caused by mining disruption in main
producer South Africa, sparked speculative buying and propelled
the price to record high of $2,290 an ounce on March 4.
Spot silver <XAG=> was at $17.77/17.82 an ounce, compared
with $17.36/17.41 late in New York on Thursday, while palladium
<XPD=> was flat at $436/440 an ounce.
