In other commodity markets, oil ignored a rise in United Nations tensions with Iraq and closed lower. Coffee and sugar prices ended steady as concerns that crop damage estimates from Hurricane Mitch may rise were offset by profit-taking.

At the Comex, gold for delivery in December closed $3.00 higher at $294.80 an ounce, and December silver rose 10.3 cents to $5.045 an ounce.

Analysts cited US economic data issued on Thursday as the trigger for the gains. After inadvertently releasing the data on the Internet, the Labour Department confirmed that US non-farm payrolls rose by only 116,000 in October, against expectations for a rise of 178,000 in that employment gauge.

The news led economists to say that a weaker-than-expected US economy improved the chances that the US Federal Reserve may lower interest rates again thismonth. The Fed cut interest rates twice in October, citing worries about economic growth.

"The day got off to a slow start but picked up momentum on fund buying of gold, helped by expectations the US dollar would fall further on another likely Fed interest rate cut after the lower-than-expected US jobs data," said Carlos Perez-Santalla, a floor trader with Hudson River Futures.

Also supportive was a rise in the Philadelphia Stock Exchange's sector index of North American gold mining stocks, called the XAU index, which rose another 5 per cent on Thursday.

"The XAU index has jumped nearly 15 per cent in the past two days and is often seen as a leading indicator for the gold market," Perez-Santalla said.

Gold prices may also have gained from the renewed tensions between Iraq and the United Nations. Iraq's defiance of UN arms inspections prompted Britain to say the world body had the basis to launch threatened air strikes against Iraq. US president Bill Clinton said "all options" for UN action wereopen.

The oil market, however, largely ignored the latest flare-up in a long-running war of words between the two sides.

At the New York Mercantile Exchange, crude oil for December delivery closed 17 cents lower at $13.97 a barrel. That pressured product prices, with December gasoline ending down 0.56 cent a gallon at 42.80 cents and December heating oil down 0.29 cent a gallon at 39.10 cents.

"Unless there's a threat to oil supply from the Gulf because of military action, the market will view prolonged rhetoric over Iraq's actions with cynicism," one Nymex floor trader said.

Elsewhere, coffee and sugar markets marked time as damage estimates from Hurricane Mitch's rampage through Central America last weekend filtered in. Mitch, still powerful though downgraded to a tropical storm, lashed the Florida Keys on Thursday before heading toward the Bahamas.

The death toll from Mitch rose above 9,000 in Central America and governments there continued to report massive losses from food crops as well asprimary export earners like coffee, sugar and bananas. But traders said after this week's price spikes they were waiting for definitive loss estimates.

At the Coffee Sugar and Cocoa Exchange, December coffee ended 0.30 cent a pound lower at 124.35 cents on profit-taking but was still up more than 14 cents on the week. March sugar ended 0.03 cent a pound lower at 8.02 cents after rising to a two-month high a day earlier on crop damage reports.

"It actually came back from the lows. The market held pretty well," said Judith Ganes, first vice-president and senior tropical commodities analyst at Merrill Lynch in New York.