Reuters: US Dollar Report: PRECIOUS-Gold steadies around six-month highs after US jobs data

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PRECIOUS-Gold steadies around six-month highs after US jobs data Sep 10th 2012, 10:02 Mon Sep 10, 2012 6:02am EDT * Gold near six-month highs after U.S. jobs data * ETP holdings at record; futures investment expands * Palladium up; Chinese car sales rise in Aug * Coming up: Japan July machinery orders; 2350 GMT By Amanda Cooper LONDON, Sept 10 (Reuters) - Gold eased on Monday after having posted a third successive weekly gain last week that took the price to its highest in six-months, when a softer report on the U.S. jobs market fed expectations for U.S. monetary policy to remain loose. Friday's monthly U.S. employment report showed fewer jobs were created than expected, which boosted the gold price by more than 2 percent, its strongest one-day gain this month. The gold price's rise to six-month highs has come against a backdrop of mounting expectations for support for the U.S. economy by the Federal Reserve, as well as for the European Central Bank to protect the euro. Investment in gold-backed exchange-traded products reached a record high last week, while holdings of U.S. gold futures by speculators rose to their highest in a year. Spot gold was down 0.1 percent at $1,733.75 an ounce by 0908 GMT, having risen last week by 2.7 percent, racking up a third consecutive weekly increase and its longest stretch of gains since the start of the year. "This revising of (U.S. expectations) was something we thought was main event risk and also coincinded with the ECB providing a much less hostile environment for European assets and that reduces the capital flight from the euro area into the United States," Michael Lewis, an analyst at Deutsche Bank, said. "The combination of QE and dollar weakness has reignited the interest of the private sector. Central banks and the public sector have already been aggressive buyers of gold, so it doesn't change our view. It makes us more relaxed about the view," Lewis said. Deutsche Bank analysts expect the gold price to average $1,726 an ounce this year, before rallying to $2,000 early next year, making their outlook one of the more bullish from a Reuters mid-year price survey in July. The U.S. economy created just 96,000 jobs in August, well below expectations and less than what is needed to keep up with population growth, a government report showed on Friday. The unemployment rate fell to 8.1 percent from 8.3 percent but only as a result of many U.S. jobseekers abandoning the labour market, further reinforcing the case for more bond buying, or quantitative easing. Since the Fed first used QE as a means to encourage growth in late 2008, gold has more than doubled in value, hitting a record $1,920.30 last September. The ensuing low level of real interest rates, which strip out the effect of inflation and the pressure on the dollar help create a favourable environment for investing in gold, which profits from dollar weakness. "Our economists now expect the Fed to ease further at this week's FOMC meeting, providing gold the catalyst it requires to test fresh highs for this year over the coming weeks," Barclays Capital said in a note. "The growth in investment demand over the past sessions has been sufficient to offset the persistent weakness in the physical market. Physically backed ETPs have set yet another record while speculative positioning has risen to a six-month high," Barclays added. GOLD RUSH Holdings of gold in the major ETPs last week touched a record 72.37 million ounces, after having drawn in nearly 2.0 million ounces of metal in a month. Speculative investment in U.S. gold futures reached its highest level in a year last week, according to data from the Commodity Futures Trading Commission (CFTC). The ECB last week outlined its proposal for buying the government bonds of euro zone member states that request formal financial aid, which has helped drive the single European currency to five-month highs against the dollar. Gold in euros was up 0.2 percent on the day at 1,355.88 euros an ounce. On Friday, euro/gold struck a session peak of 1360.82 euros, bringing it within just 13 euros of last September's record highs. In other news, Hong Kong's July gold shipments to China nearly doubled on the year, while exports over the first seven months exceeded total 2011 volumes, suggesting China is well on its way to overtake India as the world's top gold consumer. Palladium outperformed the rest of the precious metal complex, rising by 1.3 percent on the day to $657.50 an ounce to hold around its highest since early May, helped by Chinese car sale figures. The China Association of Automobile Manufacturers says today automakers shipped 1.5 mln passenger cars, trucks and buses to dealerships last month. Sales of passenger cars in the first eight months of the year rose 8 pct to 9.95 mln. Palladium relies heavily on the Chinese car market, the world's largest, for demand, where it is used in catalytic converters for gasoline-powered engines. Platinum rose 0.6 percent to $1,591.49 an ounce. The platinum price has rallied by more than 14 percent in a month after a violent strike in South Africa shuttered the operations of Lonmin, the world's third-largest producer of the metal. Silver edged up 0.1 percent to $33.69 an ounce. The price touched an intraday peak of $33.95, its highest since March this year. Link this Share this Digg this Email Reprints

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