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PRECIOUS-Gold profits from stronger euro, pre-payrolls caution

(Updates with comment, refreshes prices)

* Gold hovers around 2012 highs * ETF options highlight caution ahead of US jobs data * Platinum eases, S. Africa strikes continue (Updates throughout) By Amanda Cooper and Clare Hutchison

LONDON, Oct 2 (Reuters) - Gold was broadly steady on Tuesday, a day after touching its highest level of the year, helped by a stronger euro and by caution ahead of the release of U.S. employment data this week.

Spot gold was up 0.1 percent at $1,776.49 an ounce by 1500 GMT. It hit a peak of $1,791.20 on Monday, its highest since mid-November last year.

Trade was thin as Chinese markets remained closed for a week-long holiday and investors awaited the U.S. government's monthly assessment of the labour market scheduled for Friday.

A Reuters poll shows analysts expect 113,000 workers to have been added to non-farm payrolls in September, following August's increase of 96,000 jobs.

The Federal Reserve has made job creation the objective of its $40-billion a month bond-buying programme, known as quantitative easing, which it hopes will keep credit flowing freely through the economy and borrowing costs low.

"We do have this conditional QE and it is conditional on employment growth, and the employment growth release therefore must be more important than ever. So we are waiting for that," Mitsubishi analyst Matthew Turner said.

The Fed has employed this policy tool twice in the last four years and the anticipation of this third round of bond purchases has been one of the key drivers behind a 10-percent rally in the gold price in the last six weeks.

But some analysts say Friday's data alone may not be enough to push gold through the $1,800 threshold, which is seen as the next resistance level.

"It's interesting to look at non-farm payrolls and what that means for Fed behaviour but the vast majority of QE3 is already priced in," said Nic Brown an analyst at Natixis.

"I would expect it to trundle around between $1,750 and $1,800, pretty much what it's done for the last two or three weeks since the Fed announced QE3."

The next significant price rise will come if the U.S. Congress fails to reach an agreement to raise the country's debt ceiling to fund about $500 billion in expiring U.S. tax cuts and automatic spending cuts set for next year, Brown said.

Gold drew strength from the euro's recovery from three-week lows against the dollar .

The single European currency still looked fragile given the uncertainty over when Spain may apply for a sovereign bailout from its European partners in exchange for the European Central Bank's help in lowering its borrowing costs.

Gold priced in euros fell 0.5 percent to 1,374.16 euros an ounce, having hit a record high at 1,386.38 euros on Monday.

Gold denominated in dollars hit a record $1,920.30 an ounce in September last year.

MARKET CAUTION

Highlighting how undecided the market is about the chances of gold breaking out much higher or lower ahead of Friday's payrolls figures is the high concentration of bets on options on shares in the SPDR Gold Trust at close to current market prices.

Most open interest on options in SPDR, the world's largest exchange-traded fund backed by gold, is clustered around call options at the current price of the fund at $172.0, which equates to a spot gold price of $1,774.35.

Call options give the holder the right to buy shares in the trust at a set price by a certain date, and open interest in at-the-money calls is double that of put options for the upcoming Oct. 5 expiry.

Investment demand for gold, as measured by inflows of metal into the world's major ETFs, continued to grow, following an addition of nearly 130,000 oz of metal on Monday to a range of funds, including SPDR, the COMEX Gold Trust and ETF Securities' non-U.S. products.

"Overall, we believe that bullion investors might take a breather here, with gold stuck below recent highs in volatile and thin trading this week," Andrey Kryuchenkov, an analyst at VTB Capital, said in a note.

"Our target resistance is back at $1,800 on a confirmed close above $1,780. On the downside, the market is still supported around $1,725, should we slip back below our new short-term support at $1,750," he said.

The firmer tone in base metals such as copper and nickel fed through to the industrial precious metals.

Silver eased by 0.3 percent to $34.55 an ounce, while palladium rose by nearly 2 percent to $649.22 an ounce, set for its biggest one-day increase since Sept. 10.

Platinum rose by 0.2 percent to $1,675.49 an ounce.

The price has risen by 9 percent in the last month after a series of strikes in South Africa's platinum belt, where most of the world's supply of metal comes from.

(Editing by Keiron Henderson and Jason Neely)

Keywords: MARKETS PRECIOUS/