NEW YORK (Reuters) - U.S. gold futures prices rose above a key psychological target of $700 an ounce to a four-month high on Thursday as funds renewed their buying ahead of expectations for a weak U.S. employment report on Friday, traders said

. "I think it's people who are buying gold in anticipation of a disappointing employment number tomorrow. Payrolls are expected to be weak and would argue for a rate cut and therefore flight-to-quality buying of gold," a trader said.

Benchmark December gold on the COMEX division of the New York Mercantile Exchange jumped $10.90 to $701.60 an ounce, and charged up to a $703.50 high, dating back to May 9. The session low was $690.20 an ounce.

Technical gold buyers had been aiming for the key goal at $700 an ounce since Tuesday's rally. The upper band of December gold's range dating back to July 2006 at $720 an ounce marks the next big target for that contract.

Gold was strong along with other metals as one trader pointed out funds renew their start-of-month purchases around the fourth business day . "It's the fourth trading day of the month and funds traditionally get in on this day. The open interest has really come off in the last month. You have crude oil up to $77. You have the monetary crisis. And people are piling in. It's just about time," "We're talking about under-ownership of gold. The open interest in gold futures is really low and it's starting to come back up. That's what's pushing the price up," he added.

On Friday at 0830 a.m. EDT/1230 GMT, August U.S. payrolls data is due and analysts project tepid gains.

If jobs growth comes in weak as expected, it may support calls for the U.S. Federal Reserve to cut the key overnight interest rate to 5.0 percent from 5.25 percent.

A rate cut tends to weaken the dollar, making gold cheaper for holders of other currencies.

A steep rise in oil prices helped gold, which is seen as a hedge against oil-led inflation.

Crude oil rose above $76 per barrel after refinery snags and slower imports drained U.S. gasoline and crude stocks and stoked fears of a fuel shortage this winter in the world's biggest consumer.

Renewed volatility in the Middle East, source of about a third of the world's oil, also helped drive oil prices up and spurred flight-to-safety gold purchases.

Syria accused Israel of bombing its territory on Thursday and warned it could respond to its neighbour's "aggression and treachery".[nL062568]

A White House spokesman declined to comment and a State Department spokesmen said he could not substantiate news reports on the incident. [nN06334249]

Spot gold surged to a 16-month peak at $697.10 an ounce also on firm oil prices and technical buying. It was trading at $695.50/697.10 an ounce, above $681.40/682.0 an ounce late Wednesday. London bullion was fixed at $688.15.

COMEX December silver jumped 31.0 cents to $12.6650 an ounce, and hit a $12.67 high, a level last seen Aug. 16.

Spot silver soared to $12.50/12.53 an ounce, up sharply from $12.19/12.22 an ounce late Wednesday. The London silver fix rose to $12.2450 per ounce.

NYMEX October platinum advanced $18.0 to $1,291.0 an ounce. Spot platinum went up to $1,285.50/1,292.50.

December palladium increased $4.15 to $341.0 an ounce. Spot palladium rose to $334.50/338.50.