Gold up on lower dollar, shares after US data

[LONDON] Gold rose on Friday as the dollar and equities failed to react to a better-than-forecast US jobs report, and the metal was set for the first weekly gain in four weeks as political uncertainty in Greece boosted demand for assets seen as safe.

Spot gold rose to a session high of US$1,217.30 an ounce after the US data, not far from a three-week peak of US$1,222.40 hit on Tuesday. It was trading up 0.4 per cent at US$1,213.38 by 1506 GMT.

US gold futures for February delivery rose 0.9 per cent to US$1,218.40 an ounce.

Spot prices were heading for a 2.5 per cent weekly gain, snapping a three-week losing streak, mostly due to global equities slumping at the start of the week on worries over developments in Greece that could see it quitting the euro.

The dollar was down 0.1 per cent against a basket of currencies and European stocks remained negative after data showed US nonfarm payrolls increased by 252,000 in December, topping expectations for an increase of 240,000. The unemployment rate fell 0.2 percentage point to a 6-1/2-year low of 5.6 per cent.

Despite recent improvements in the job market, investors remained focused on the fact that the minutes of the Federal Reserve's latest policy meeting released on Wednesday indicated the central bank would be patient in raising rates due to low inflation expectations.

Boston Fed President Eric Rosengren, speaking on Thursday, highlighted the Fed's cautious stance, saying the central bank can likely be patient not only on the timing of the first interest rate hike but also on the series of subsequent increases.

Gold, which has no yield, tends to suffer in an environment of rising interest rates.

"Gold is supported in this tight US$1,200/US$1,230 range because people are still a bit worried that with low inflationary pressures the Fed will not hike interest rates so soon," ABN Amro analyst Georgette Boele said.

In the physical markets, demand from China has been strong in recent weeks in the build-up to the Lunar New Year holiday in February, when gold is bought for gift-giving.

Premiums on the Shanghai Gold Exchange were hovering between US$5 and US$6 on Friday over the global benchmark, indicating strong buying interest.

Silver was up 1.2 per cent at US$16.51 an ounce, while platinum rose 0.6 per cent at US$1,221.50 an ounce and palladium one per cent to US$795 an ounce.

REUTERS