* Data fuels expectations Fed will continue stimulus
* Dollar at 8-month low versus basket of currencies
* Shares up after U.S. nonfarm payrolls
* SPDR holdings drop 10.5 T, biggest 1-day fall since July
By Marina Lopes and Clara Denina
NEW YORK/LONDON, Oct 22 Gold rose over 2 percent
to three-week highs on Tuesday as weak U.S. jobs figures raised
expectations the Federal Reserve will continue into next year
its massive stimulus program that has bolstered bullion prices.
Nonfarm payrolls rose by 148,000 in September, the Labor
Department said, below the 180,000 forecast in a Reuters poll,
increasing worries that the world's largest economy was losing
momentum even before the government shutdown this month.
"We were not even close to the 180,000 number...the main
takeaway is that Fed tapering is still a long way away, probably
not for this year and that's the reason why everything shot up -
equities, commodities and gold in particular," Societe Generale
analyst Robin Bhar said.
Signs the U.S. economy lost steam even before the
acrimonious budget fight could convince the Fed to hold off any
decision on scaling back its bond-buying stimulus until the
extent of the economic damage from the fiscal standoff is clear.
"Consensus is almost universal that the Fed is not going to
tighten, probably until March," Bill O'Neill, partner of
commodities investment firm LOGIC Advisors.
Buying continued after upbeat construction spending numbers
Spot gold rebounded from early morning losses after
the data, rising over 2 percent to as high as $1,344.46 an
ounce, its highest since Sept. 30, by late morning.
It was up 1.9 percent at $1,340.1 an ounce by 2:25 p.m. EDT
The metal broke above technical resistance at its 100-day
moving average of $1,325, with the next area of resistance seen
U.S. gold futures for December rose $26.8, or 2
percent, to settle at $1,342.6 an ounce.
The dollar tumbled to a new eight-month low against a
basket of currencies, while global stocks edged up on prospects
of a longer spell of super-easy money from the Fed.
Gold has been boosted by increased central bank liquidity
and a low interest rate environment over the past few years,
which encourages investors to put money into
Analysts said investor sentiment was likely to remain
subdued, however, after a big drop in holdings in the largest
gold-backed exchange-traded fund (ETF), SPDR Gold Trust,
which saw outflows of 10.51 tonnes to 871.72 tonnes on Monday.
That was the biggest one-day fall in the fund's holdings
since early July.
Physical demand for gold in major consumer India remained
subdued ahead of the Diwali celebrations, usually considered an
auspicious time to buy jewellery.
"Importers in India are still struggling to adopt the new
import and re-export (80-20) regulation while the import tax
hikes have already hurt smaller jewellers," VTB Capital said.
In China, premiums to spot London prices remain near lows
for the year, traders said.
In other precious metals, silver mirrored gold's
moves and rose 2.4 percent to $22.72 an ounce.
Spot platinum was up 1 percent at $1.447.49 an ounce
and spot palladium rose 0.3 percent to $749.22 an ounce.
Switzerland's net imports of raw platinum in September fell
to their lowest in four months, as exports to China hit a
three-month high at 1.903 tonnes, customs data showed.
(Editing by Jason Neely, Dale Hudson, Josephine Mason, Leslie
Gevirtz and Marguerita Choy)