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Gold firm but gains limited before ECB, jobs data

By Staff
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TOKYO, Apr 6 (Reuters) Spot gold edged up on Thursday after firm oil prices and a weaker dollar against the euro bolstered prices in New York, but traders were careful about chasing gold too strongly ahead of key events.

Investors and fund operators were eager to push spot gold towards 0 per ounce, but refrained from buying actively ahead of a European Central Bank meeting later in the day and U.S. payroll data due for release on Friday.

Metal traders are watching currencies and crude oil to determine whether to take new positions in gold and other precious metals as they lacked incentives of their own.

''Gold is supported, but rises are extremely capped,'' said Tatsuo Kageyama, analyst at Kanetsu Asset Management.

''0 is very near, but I don't think many players are eager to build up new buy positions from here.'' As of 0258 GMT, spot gold was trading at 8.30/589.20 an ounce, up from 7.40/588.30 in late New York on Wednesday. It was moving in a range of 7.50 to 8.80 in Asian trade.

Except for buoyant base metals, funds could be considering reducing positions in risk assets, including commodities, while they may be looking for chances to increase exposure in fixed income securities amid prospects of further credit tightening in the United States, Europe and Japan, Kageyama said.

On Wednesday, the euro rose to a two-month high against the dollar before later pulling back slightly ahead of the ECB meeting, where officials are expected to signal further interest rate rises.

A remark by U.S. Treasury Secretary John Snow that he thought Friday's March unemployment report will contain good numbers helped the dollar recover some of its losses and capped gold.

Nonfarm U.S. jobs for March are forecast in a Reuters poll to have risen by 190,000, compared with a gain of 243,000 in February.

Firm oil prices and Tokyo Commodity Exchange gold futures <0#JAU:> supported the spot gold price.

NYMEX crude oil for May delivery was trading up 39 cents at .46 a barrel by 0258 GMT after having rallied 84 cents the previous day, pushing back towards Monday's .90 peak, the highest in two months.

High crude oil prices fan inflationary fears, and are often a factor that drives investors to seek gold as a hedge.

A weaker yen encouraged Japanese investors to buy TOCOM gold.

Key most-distant February TOCOM gold closed morning trade at 2,249 yen per gram, up 26 yen or 1.2 percent from Wednesday.

Reuters SHB DB1134

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