Gold rose above $1,430 an ounce on Friday as fresh violence flared in Libya, and after US February payrolls data supported expectations the Federal Reserve will hold off tightening monetary policy. Gains in gold also lifted silver prices, which climbed to their highest since early 1980 at $35.32 an ounce.
Spot gold hit a high of $1,431.20 an ounce and was bid at $1,428.75 at 1536 GMT, against $1,415.59 late in New York on Thursday. Prices fixed at $1,427 at 1500 GMT. US gold futures for April delivery rose $13.30 to $1,429.70. The US Labour Department said non-farm payrolls increased by 192,000 in February, above market expectations for 185,000 jobs. Data for December and January was revised to show 58,000 more jobs created than previously estimated.
"Overall they indicate what Fed Chairman Bernanke already pointed out in his two testimonies this week," said Peter Fertig, a consultant at Quantitative Commodity Research. "The economy is improving, growth could surprise on the upside, but the economic recovery is not producing new jobs as it has in the past, given those growth rates.
The Fed's easy monetary policy, in place since the financial crisis rocked the markets from 2008, has been a major reason for gold's rally to record highs, because it has undermined confidence in paper currencies. Comments from the European Central Bank on Thursday that stoked expectation eurozone monetary policy would tighten sooner rather than later had knocked gold sharply lower.
Gold prices hit a record high at $1,440.10 an ounce on Wednesday as violence flared in Libya after weeks of unrest in the region. While they have since corrected, unrest in Libya in particular is continuing to support gold. Forces loyal to Muammar Gaddafi widened attacks on rebel-held areas in an escalation of Libya's crisis on Friday and violence spread to the capital when gunmen opened fire to break up dissident protests.
"Ongoing speculation that the conflict in Libya might come to an end weighed heavily on precious metals in yesterday's trade," said Standard Bank in a note. Interest in investment products such as gold-backed exchange-traded funds slackened, meanwhile. Holdings of the world's largest, New York's SPDR Gold Trust, fell to their lowest since mid-May on Thursday at 1,210.621 tonnes.
Holdings in the world's largest silver ETF, the iShares Silver Trust, rose to 10,794.89 tonnes by March 3, their highest since early January. Spot silver was bid at $35.26 an ounce against $34.17. Among other precious metals, platinum was at $1,836.74 an ounce against $1,823.49, while palladium was at $816.22 against $812.
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