PRECIOUS-Gold edges up; dull US jobs data revives QE3 talk

Fri Apr 6, 2012 9:42am EDT

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(Changes dateline)

* Spot gold up $10, 0.5 pct, after gloomy jobs data

* Dollar index, stock futures tumble

* Trading activity nearly nil due Easter holiday

* Bullion still set for 1.8 pct loss after Fed minutes (Recasts with jobs data, updates throughout)

By Jonathan Leff

NEW YORK, April 6 (Reuters) - Gold rose modestly in anaemic spot trade on Friday after disappointing U.S. payrolls figures revived talk about an extension of the Federal Reserve's stimulus measure, but gains were too mild to stem the first weekly loss in three weeks.

With only a handful of ticks registering in the cash market due to the U.S. and European exchange holidays, spot gold was bid at $1,637.99 an ounce by 8.54 am EST (1354 GMT), up about 0.5 percent on the day and around $7 higher than just before the U.S. non-farm payrolls data. For the week bullion was down 1.8 percent.

U.S. payrolls rose by just 120,000 jobs last month, lower than even the most pessimistic analyst had predicted and the smallest gain since October, the Labor Department said on Friday. The unemployment rate fell to a three-year low of 8.2 percent as the labour force shrank.

"This is going to turn up the heat on the debate for QE3 since a deceleration in the economic data has been highlighted as a pre-requisite for such a programme," said Thomas Simons, money market economist at Jefferies & Co in New York.

The S&P stock index futures fell more than 1 percent and the U.S. dollar index lost 0.3 percent as the data suggested gloomier economic conditions than expected, but with equity and money markets shut for the holiday the full extent of reaction will not be apparent until Monday.

With trading conditions so thin, it is unclear whether the data will be enough to dispel the downbeat mood that prevailed on Tuesday, when minutes from a U.S. Federal Reserve policy meeting showed a waning appetite for another round of bond purchases.

Bullion touched a near three-month low of $1,611.80 earlier this week, but has cautiously crept higher in the past two days on technical buying and, now, new hope that the door for further monetary policy support may be open wider than earlier believed.

Earlier in the week strength in the dollar had dimmed gold's safe-haven appeal as fears about the euro zone debt crisis resurfaced after a Spanish government debt auction this week was poorly received.

A stronger greenback makes dollar-priced commodities more expensive for buyers holding other currencies.

Spot silver was little changed after the data, holding gains of 0.2 percent at $31.72, extending a 1.1-percent rise in the previous session. The metal is on course for a weekly fall of 1.5 percent. (Additional reporting by Rujun Shen in Singapore; editing by Keiron Henderson)

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