Gold holds steady above $900/oz

Tokyo - Gold held steady above $900 on Friday following a slump the previous day when its safe-haven status was hit by a stock rally as the G20 agreed on steps to restore global economic growth and rebuild the financial system.

But gold could face another bout of selling later in the day if stock markets take US nonfarm payrolls data in their stride after weak related jobs data this week.

"The overall market outlook is quiet in Asia. I think the market has discounted the news about the announcement of G20," said Louis Lok, a dealer at Bank of China in Hong Kong.

"The next focus is the US announcement of the nonfarm payrolls data," and its impact on metals, stock and currency markets, Lok said.

Spot gold stood at $903.45 an ounce by 05:16 GMT, almost flat with New York's notional close of $903.15. It has fallen about 2% this week, retreating further from a peak in February above $1 000.

Analysts polled by Reuters are forecasting that US nonfarm payrolls shrank by 650 000 in March, nearly matching a fall of 651 000 in February.

Bank of China's Lok said even a steady day on Wall Street following the jobs data could be negative for gold after it failed to climb above $930 per ounce this week.

"It's a tug of war between hopes for an economic recovery and data showing the economy is still in poor condition," said Tatsufumi Okoshi, senior economist at Nomura Securities Co's financial and economic research centre.

"Gold will basically move in a range around the $900 zone ... until the US and Chinese economies show no more deterioration, which will probably be in the second half of the year," he said.

China's chief statistics official was quoted as saying in a newspaper report that the economy might have bottomed out.

Gold may get a lift if North Korea launches a rocket over the weekend in a move that is widely seen as a disguised long-range missile test.

But any gold rally due to the well-flagged event would be short-lived as geopolitical tension in the region does not usually heat up, said Nomura's Okoshi said.

"From past experience, North Korea's case always falls into a deadlock and doesn't go anywhere," he said.

On Thursday, bullion dipped more than 3% to a two-week low of $893.70 as G20 leaders set out a $1.1 trillion package to help revive the global economy.

Th G20 also agreed that some money for low-income countries would be raised by the IMF selling 400 tonnes of gold as previously planned.

Traders said that such a sale had been factored in and that the market could easily accommodate it it would be conducted in a way that would not cause price fluctuations.

The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings were unchanged at a record 1 127.44 tonnes as of April 2. Its holdings climbed to that amount on March 29.

- Reuters