Gold rose 1.5 percent on Friday, on track for its biggest daily gain in a month after data showing US employment growth in March unleashed heavy short-covering by bullion investors who had feared the job figures would sharply exceed Wall Street's expectations. In a brisk turnaround from heavy selling in the days before the release of the US labour data, prices were up 1 percent for the week, the first increase in three weeks.
US nonfarm payrolls increased by 192,000 jobs last month, slightly below economists' estimate of 200,000 and the jobless rate holding near a five-year low. "Everyone had been saying the job number was going to be so much better, but the economy didn't improve the way investors had expected, and that's why the short-sellers are covering their positions," said Miguel Perez-Santalla, vice president at BullionVault.
Spot gold rose 1.4 percent to $1,304.76 an ounce by 12:14 pm EDT (1614 GMT), having earlier reached $1,306.33 - the highest since March 27. US COMEX gold futures for June delivery were up $20.60 at $1,305.30 an ounce. Turnover was not particularly strong, however, with volume so far at 110,000 lots, on track to finish below the 30-day average of 200,000 contracts, preliminary Reuters data showed.
Bullion rose as other financial markets were volatile, with US equities, measured by the S&P 500 index, turning sharply lower after initial gains, and US Treasury yields also falling sharply. Silver rose 1.6 percent to $20.11 an ounce, tracking gold's rise. Gold prices drew some support after Iraq's central bank said on Friday its gold reserves had reached 90 tonnes after it bought 60 tonnes over the past two months.
In physical market news, banks in China have been importing less gold over the past month as demand waned after the festival season, while cheaper prices at home due to a softer yuan also curbed overseas purchases of the precious metal, banking sources and traders said. Among platinum group metals, platinum climbed 0.7 percent to $1,445.50, while palladium was up 0.1 percent to $784.70 an ounce.
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