Dollar's reaction to U.S. jobs data eyed for direction

* SPDR Gold holdings fall 0.055 tonnes on Thurs [GOL/SPDR]

By Risa Maeda

TOKYO, Nov 6 (Reuters) - Gold held steady around $1,090 an ounce on Friday after its rally to a record high this week on anticipation of renewed central bank demand came to a halt, with investors looking to economic data for direction.

U.S. October non-farm payrolls data, due at 1330 GMT, is expected to highlight the strength of the economic recovery, give a clear direction to the dollar and set the tone for the gold market.

Fewer job losses than expected could prompt investors to move away from the dollar into recovery-sensitive assets, such as stocks and commodities, including gold, traders said. Gold is also considered a hedge against a weakening dollar.

Analysts polled by Reuters predicted U.S. employers sliced 175,000 from their payrolls in October, fewer than the 263,000 jobs lost in September. The jobless rate likely edged up to 9.9 percent from a 26-year high of 9.8 percent in September.

A bullish number could drag down the dollar and, as a result, prop up the gold market, said Tatsufumi Okoshi, senior economist at Nomura Securities Co.

We expect the dollar's downtrend to extend into the first quarter of next year, likely sending the euro to $1.55 by then. Given that scenario, gold has an upside potential to rise to and above $1,100 in coming months before the dollar eventually makes a turnround and casts a shadow over gold, he said.

Spot gold XAU= was at $1,090.45 an ounce at 0316 GMT, up 0.1 percent from New York's notional close of $1,089.55. It hit a record high of $1,097.25 on Wednesday.

At the current level it is poised to rise about 4.4 percent on the week, the biggest weekly gain since early October.

U.S. gold futures for December delivery GCZ9 stood at $1,091.00 an ounce after rising $2 to $1,089.30 on Thursday.

In the currency market, the euro was little changed at $1.4868, off one-week highs above $1.49 marked earlier this week. [USD/]

On Tuesday, bullion rallied $25, largely driven by news of India's purchase last month of 200 tonnes of bullion from the International Monetary Fund, which soothed investor nerves about possible oversupply in the gold market.

The IMF is selling another 200 tonnes of gold. [ID:nSP375900]

Asian central banks appear to be in little hurry to follow India's lead and make big purchases of gold given its high market price and the availability of cheaper domestically produced gold. [ID:nSP61512]

Technically, a correction in gold could extend to the $1,060-$1,065 zone. But a further downturn to and below the psychologically important $1,000 level is unlikely in the near term, analysts said.

The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings fell 0.055 tonnes to 1,108.344 tonnes on Thursday, marking the first decline since Oct. 30. [GOL/SPDR]

Another focus is the outcome of a Nov. 6-7 meeting of G20 finance officials in St. Andrews, Scotland.

Six weeks after world leaders vowed to rebalance the global economy, finance ministers and central bank governors are set this weekend to struggle with the complex, politically sensitive process of building a mechanism to achieve that goal.
[ID:nL3602813] [ID:nLQ516726]
Precious metals prices at 0319 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1090.00 0.45 +0.04 23.84
Spot Silver 17.43 0.06 +0.35 53.98
Spot Platinum 1355.50 2.00 +0.15 45.44
Spot Palladium 329.00 0.50 +0.15 78.32
TOCOM Gold 3188.00 16.00 +0.50 23.90 45560
TOCOM Platinum 3967.00 18.00 +0.46 49.59 6107
TOCOM Silver 508.80 6.50 +1.29 59.35 297
TOCOM Palladium 967.00 12.00 +1.26 75.82 166
Euro/Dollar 1.4873
Dollar/Yen 90.61
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.

India Investment Gold Jobs