Gold chopped back and forth on Friday after news that US jobs growth in June was more sluggish than expected, with prices initially rising 1 percent before profit-taking pared the gains.
The dollar fell sharply after the data release that heightened concerns the US economy is slowing. The government said the economy had added just 121,000 jobs in June, well below consensus forecasts of 185,000.
Spot gold was quoted at $631.50/632.50 an ounce by 1425 GMT, against $632.20/633.70 in New York late on Thursday. Prices hit a one-month peak of $637 in the immediate aftermath of the jobs news.
A weaker dollar makes gold cheaper for holders of other currencies and increases demand for the metal.
Peter Hillyard, head of commodity sales for ANZ Investment Bank, said he expected volatile moves to persist in the short-term, but was looking for gains further ahead.
"It's hard to take a short-term view of the market these days for the simple reason that the short-term is so much in the hands of the funds," he said.
He was looking for a move up to $700 an ounce in July, adding that prices could also see sharp pullbacks to the low $620 area.
"I think there is sufficient investor money coming in to this market to drive it there without too much difficulty."
Analysts expected market uncertainty over the next few months over the likely actions of the US Federal Reserve.
"If gold manages to go through important resistance at $635 and $637 and hold these gains into the COMEX close, then the metal will probably trade higher in coming days and weeks," said John Reade, analyst at UBS Investment Bank. "But if we fail to get through this level today and end the day well off the intra-week highs, then we suspect gold will trade in a range of perhaps $570-$635 through the balance of the summer."
Dealers said gold attracted little safe-haven buying despite news that North Korea had vowed to carry out more missile tests and threatened to use force if the international community tried to stop it.
But they saw gold extending gains in the long term.
A Reuters poll of 31 analysts and senior traders showed gold would sprint up about 40 percent to an average $625 an ounce in 2006 from its 2005 average of $445.05.
The rise was expected to continue at a blistering pace next year, even if other commodities hit a rough patch, on expected dollar weakness.
In other metals, silver eased to $11.38/11.48 an ounce from $11.52/11.62 in the US market, while platinum fell to $1,228/1,233 from $1,232/1,238. Palladium was flat at $321/326.