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

* 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)