TOKYO (Reuters) - Gold firmed on Wednesday and was poised to post its best quarterly performance since the first quarter of 2008, helped by dollar weakness and technical momentum.
Spot gold was at $996.30 per ounce at 0613 GMT (2:13 a.m. EDT), up 0.6 percent against the notional close in New York of $990.70, supported by Wednesday's retreat in the greenback.
U.S. gold futures for December delivery were at $997.80 per ounce on the COMEX division of the New York Mercantile Exchange, up 0.4 percent from Tuesday, when the contract rose 30 cents.
Bullion is set to rise for the fourth quarter in a row in the July-Sept period, climbing almost 8 percent and marking its strongest performance since it gained 9.9 percent in the January-March quarter of 2008.
It rallied to an 18-month high of $1,023.85 an ounce earlier this month, just a few dollars shy of the March 2008 record peak of $1,030.80.
It has since succumbed to profit-taking, with a dollar bounce from a one-year low marked last week keeping bullion investors largely on the sidelines.
Market players are awaiting the reaction of currency and equity markets to U.S. private payrolls data for September due out at 8:15 a.m. EDT. The ADP estimate of private payrolls is viewed as a preview to the U.S. Labor Departments' monthly non-farm payrolls report due this Friday.
Economists polled by Reuters estimated that the ADP national employment report would show that payrolls shed 210,000 jobs in September.
"Trading is rangebound. The focus is on the foreign exchange market and U.S. payrolls data to be released tonight," said Leon Lee, senior gold trader at Bank of China in Hong Kong.
In the currency market, the dollar fell 0.5 percent against a basket of currencies .DXY. The euro rose 0.3 percent to $1.4630, having climbed over 4 percent so far in July-September.
There is little physical buying demand at current price levels, Lee said, noting that further consolidation toward $980 per ounce would be needed to spur such buying.
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings stood at 1,094.107 tonnes on Tuesday, unchanged since Thursday.
Looking ahead, some market pundits see signs of economic growth undermining gold.
But others say gold would soon regain its allure as a hedge against a weakening dollar as the U.S. central bank will likely maintain its easy grip on monetary policy to support the financial system.
Koichiro Kamei, managing director at Market Strategy Institute in Tokyo, said a further rally in global equity markets seems unlikely as prices have factored in most of the bright spots ahead. Instead, banks' weak quarterly earnings due to rising bad loans as the economy stays fragile could increase gold's appeal as a safe-haven asset.
