* Central banks said to be lining up to buy gold
* Eyes on U.S. monthly jobs report
* SPDR's gold holdings slip
(Recasts, adds comment/detail, pvs Tokyo)
By Pratima Desai
LONDON, Nov 6 (Reuters) - Gold rose on Friday, boosted by
the prospect of central banks buying the precious metal to
diversify their reserves and as the market waited for key
economic data from the United States.
Spot gold <XAU=> was bid at $1,094.55 a troy ounce at 1031
GMT from $1,089.55 late in New York on Thursday. The precious
metal earlier this week hit a record high of $1,097.25 an ounce,
a gain of more than 25 percent this year.
The trigger for the latest surge was news earlier this week
that the International Monetary Fund had sold 200 tonnes of gold
to the Reserve Bank of India for $6.7 billion. []
"People are focusing on pent up demand for gold from central
banks in emerging markets," said Michael Lewis, head of
commodities research at Deutsche Bank.
"The central bank community for the first time in 20 years
is possibly going to be a net buyer of gold having been a net
seller since 1988 ... Today the market will also focus on the
U.S. jobs data and how the dollar reacts."
U.S. non-farm payrolls for October due at 1330 GMT are
expected to show a fall of 175,000 compared with a drop of
263,000 in September and the unemployment rate is forecast at
9.9 percent from 9.8 percent.
"If the unemployment rate breaches the psychological 10
percent level the dollar could come under pressure," a trader
said. "But if the data are better than the consensus we could
see a retreat in gold."
A weaker U.S. currency dollar makes commodities cheaper for
holders of other currencies, while gold is often used by
investors as an alternative to the dollar.
CHINA SURPRISE
Gold rallied $25 on Tuesday, largely driven India's purchase
of gold from the IMF, which soothed investor nerves about
possible oversupply. But it surprised the market, which had
expected China to be the most likely buyer.
"Most central banks outside of the US and Europe have low
gold reserve ratios, Calyon said in a note.
"Those central banks with low reserve ratios and are keen to
diversify into gold, notably those located in Asia, will be
potential candidates to buy the remainder of the IMF's 203.3
tons of gold in an off-market purchase."
The high chances of Asian central bank gold purchases were
reinforced by Sri Lanka, which said on Thursday it had been
buying gold for the last five or six months.
Linked in with this is the dollar, which central banks will
sell when they switch to gold from U.S. Treasuries.
However, some think Asian central banks may not hurry to
follow India's lead given current record prices and the
availability of cheaper domestically produced gold.
[]
The central bank story has offset some selling by investors
as seen in the world's largest gold-backed exchange-traded fund,
SPDR Gold Trust <GLD>.
SPDR's holdings fell 0.055 tonnes to 1,108.344 tonnes on
Thursday, marking the first decline since Oct. 30.
Silver <XAG=> was at $17.52 from $17.37 late on Thursday,
platinum <XPT=> at $1,358 from $1,353.50 and palladium <XPD=> at
$329 from $328.50.
(Reporting by Pratima Desai; editing by Keiron Henderson)
