(Recasts, adds comment/detail, changes dateline, pvs Singapore)
By Pratima Desai
LONDON, Oct 3 (Reuters) - Gold prices recoverd on Friday as
the dollar's rally paused ahead of key jobs data from the United
States and a possible vote by the U.S. Congress on a $700
billion bailout package for financial firms.
Platinum <XPT=> hit a near-three year low of $941.50 an
ounce. The metal used in autocatalysts has lost more than 50
percent since a record high of $2,290 in March because of
economic weakness and falling car sales, especially in the
United States.
Spot gold <XAU=> was at $840.70/842.70 an ounce at 1028 GMT
compared with $835 late in New York on Thursday, when it hit a
two-week low $829.20 an ounce.
The vote in the U.S. House of Representatives on legislation
to mop up banks' illiquid assets and ease the credit crunch,
could go ahead later on Friday. []
If the bill is approved then the dollar could stage a
stronger recovery and an easing of financial market tensions
could see investors cutting gold investments. []
"The financial bailout in the U.S. will go ahead, this is
our working assumption, and there will be some money leaving the
gold market," said Dan Smith, analyst at Standard Chartered.
"There will be a withdrawal as panic fades and the gold
price will come off as we move into the fourth quarter. The
bailout will improve confidence, but in the longer term it will
mean a much weaker dollar and higher gold prices."
Analysts think worries about the budget deficit in the
United States could persaude investors to sell U.S.-assets,
which would send the dollar tumbling.
A weaker dollar makes commodities priced in dollars cheaper
for holders of other currencies, while gold is often used as a
hedge against financial market trouble and price pressures.
PLATINUM POTENTIAL
Traders said gold had also been helped by expectations of
poor employment data for September due at 1230 GMT, which could
again undermine the dollar.
"Although sentiment towards gold has improved significantly
of late amid the financial market turmoil and concerns over the
broader economy, prices have not continuously outperformed,"
said Barclays Capital in a research note.
Gold prices are down nearly 20 percent since a record high
of $1,030 an ounce seen on March 17.
Platinum was at $950/970 an ounce from $960 late in New York
on Thursday. More than 60 percent of global use in platinum goes
to autocatalysts. Platinum is also used in jewellery.
Major automakers reported plunging U.S. sales for September,
led by a 34 percent slide at Ford Motor Co, as the escalating
credit crisis hit the industry and raised new doubts about when
the world's auto market would stabilise. []
"In our view, beyond short-term weakness, upside potential
still exists for prices longer term, as supply problems are
likely to persist given the power problems, the shortage of
skilled labour and rising costs of production," Barclays said.
Silver <XAG=> was at $11.16/11.26 an ounce from $10.79 on
Thursday and palladium <XPD=> at $197.50/207.50 from $191.50.
(Reporting by Pratima Desai; editing by Peter Blackburn)
