Gold rose 2.6 percent on Friday, its biggest one-day gain in nearly five months, as a retreat in the US dollar and heavy short-covering lifted bullion from a 4-1/2-year low. The metal notched a third straight week of losses, however, having dropped to its lowest since April 2010 at $1,131.85 an ounce earlier on Friday.
The dollar slipped after a solid but below-expectation October US jobs report as investors took profits on the greenback's months-long rally, which has seen it reach multi-year highs in anticipation of tighter US monetary policy next year. Market watchers said bullion could still extend its slide after tumbling below key technical support at $1,180 an ounce, the low reached during gold's 28 percent plunge last year.
"After we've had such a big selloff, some speculators are covering their shorts after the worse-than-expected nonfarm number. I think that's all it is at this point," said Thomas Capalbo, precious metals trader at brokerage Newedge. Spot gold was up 2.6 percent at $1,170.10 an ounce by 3:03 pm EST (2003 GMT).
For the week, gold was down 0.3 percent, extending the previous week's near 5 percent drop. US COMEX gold futures for December delivery settled up $27.20 an ounce at $1,169.80, with volume nearly double its 30-day average, preliminary Reuters data shows. Asian trading was choppy. After subdued early trading, US gold futures slid 1 percent to $1,130.40 an ounce, their lowest since March 2010, on high volume. In only five minutes, nearly 5,000 lots changed hands, but an hour and a half later, prices popped up about $10, again on high volume.
Gold had been under pressure for a week from a rising dollar, which has benefited from expectations the Federal Reserve will move before other central banks to tighten monetary policy. Despite coming in below expectations, the US payrolls report showed the unemployment rate fell to a fresh six-year low, suggesting the economy remains on a strengthening path.
In other market news, SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.41 percent to 732.83 tonnes on Thursday, a six-year low. Silver climbed 1.8 percent to $15.65 an ounce after hitting the lowest since February 2010 at $15.03. Silver has been the worst-performing precious metal this week, down around 3 percent. Palladium gained 3.1 percent to $770.25 an ounce, while platinum was up 1.9 percent at $1,209.75 an ounce, rebounding from an earlier five-year low of $1,181.50.
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