PRECIOUS-Gold flat after U.S. payrolls, palladium rises on demand hope

Fri Mar 8, 2013 4:16pm EST

* Gold up slightly for week, snaps three-week decline
    * Payroll gains seen not strong enough to change Fed policy
    * Palladium gains on supply worry, demand hopes help

 (Updates throughout; changes byline, dateline, previous LONDON)
    By Frank Tang
    NEW YORK, March 8 (Reuters) - Gold traded flat on Friday,
ending the week with a slight gain, after data showed
improvement in the U.S. economy but not enough for the Federal
Reserve to halt its stimulus, analysts said.
    Palladium rose more than 3 percent to a 19-month high as
supply worries and booming auto demand sparked fund buying.
Increased physical deliveries in U.S. palladium futures also
suggested rising demand from end-users.
    Gold fell 1 percent earlier in the session after data showed
U.S. employers added an encouraging 236,000 workers to their
payrolls in February and the jobless rate dropped to a four-year
low. 
    The metal later erased losses as bullion benefited from
worries that across-the-board spending cuts in Washington could
slow economic recovery.
    "We did see light short-covering and fresh hedge-fund buying
coming back in as the payrolls number was being reassessed as
one that's not enough to change the Fed's policy," said James
Steel, metals analyst at HSBC.
    Spot gold inched down 46 cents to $1,577.94 an ounce
by 3:14 p.m. EST (2014 GMT), having rebounded sharply from an
earlier low of $1,560.80. 
    For the week, gold was up 0.2 percent, ending a three-week
losing streak.
    U.S. gold futures for April delivery settled up $1.80
an ounce at $1,576.90, with trading volume about 15 percent
above the 30-day average, preliminary Reuters data showed.
    Upbeat U.S. data has fuelled appetite for riskier assets
such as equities at gold's expense. The Dow rose to an
all-time high for a fourth consecutive day.
    Even though a pick-up in job growth has boosted the chances
of the Fed raising interest rates sooner than had been expected,
it is likely to take several more months of strong employment
data for the Fed to trim bond purchases and rates will not rise
for at least a year after that, analysts said. 
    Holdings of SPDR Gold Trust, the world's biggest
gold-backed exchange-traded fund, fell about 2 tonnes to a more
than 16-month low on Thursday, resuming its recent sharp
decline.
    Spot silver rose 0.4 percent to $28.98 an ounce, up
almost 2 percent from a week earlier after a four-week losing
streak.
    
    PALLADIUM RALLIES
    Among platinum group metals, palladium was up 3.4
percent at $780.97 an ounce after hitting $784.50, its highest
since September 2011. It notched a rise for the week of 8.5
percent, its sharpest since December 2011.
    Erica Rannestad, commodity analyst at CPM Group, said
palladium prices were supported by an increase in physical
delivery notices in March versus the last delivery period in
December. She expects palladium demand to rise in 2013.
    Investors have been buying palladium exchange-traded funds
briskly since the beginning of the year. Year-to-date, holdings
in four major global palladium ETFs tracked by Reuters,
including the U.S. ETFS Physical Palladium Shares,
climbed 10 percent.
    Platinum and palladium are used as auto catalytic converters
to clean exhaust fumes. While palladium is widely employed in
gasoline engines, platinum is a more effective autocatalyst for
diesel cars.
    Spot platinum was up 0.6 percent at $1,601 an ounce,
on course for a 2 percent weekly gain, its biggest in a month. 
 3:14 PM EST     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold APR   1576.90   1.80   0.1  1560.40 1583.10  204,589
 US Silver MAY  28.948  0.140   0.5   28.325  29.260   48,186
 US Plat APR   1603.90   8.80   0.6  1586.20 1610.00   12,047
 US Pall JUN    782.75  23.70   3.1   757.35  788.45    7,112
                                                               
 Gold          1577.94  -0.46   0.0  1561.55 1582.90         
 Silver         28.980  0.110   0.4   28.360  29.240
 Platinum      1601.00   9.76   0.6  1589.50 1606.50
 Palladium      780.97  26.00   3.4   759.50  784.50
                                                               
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        237,041   202,894   175,099     14.59    0.17
 US Silver       51,853    64,013    52,861     21.98    0.15
 US Platinum     14,119    13,572    10,803     17.89    0.10
 US Palladium     7,439     9,062     5,237                  
                                                               
 
 (Additional reporting by Rujun Shen in Singapore; Editing by
Dale Hudson, Jan Harvey and Jason Neely)