By Pablo Sinha
Gold rose more than 1% on Friday and was set for its first weekly gain in five, as investors dialled back expectations for U.S. rate hikes following softer-than-expected jobs data.
Spot gold TVC:GOLD was up 1.4% at $4,179.42 per ounce, as of 0744 GMT, after earlier hitting its highest level since June 23. U.S. gold futures TVC:GOLD for August delivery gained 1.6% to $4,191.90.
Bullion was on track for a weekly gain of 2.2%, its first since the week ended May 29, as weaker-than-expected nonfarm payrolls and private payrolls data tempered concerns around inflation and higher-for-longer interest rates.
The dollar was headed for a weekly drop, making greenback-priced bullion more affordable for holders of other currencies.
"What we're seeing is a reduction in the pricing of Federal Reserve interest rate hikes for the rest of this year, as well as Q1 next year, and that has been primarily driven by a rather lacklustre labour market data yesterday," said Kelvin Wong, a senior market analyst at OANDA.
Nonfarm payrolls increased by 57,000 jobs last month, sharply lower than the 110,000 expected by economists in a Reuters poll.
Traders are now pricing in roughly a 54% chance of a rate hike in September, down from 66% before the data, according to the CME FedWatch tool.
Higher interest rates typically weigh on non-yielding gold, as they make interest-bearing assets more attractive.
Rate-hike expectations have not fully disappeared, said Wong, adding that gold could still face pressure later this year, with prices potentially falling towards $3,500 an ounce.
Meanwhile, the World Gold Council said central banks were back in buying mode in May and, based on the latest reported data, official gold reserves increased by a net 41 tons during the month.
Spot silver BIST:XAGUSD1! rose 2.9% to $62.80 per ounce, platinum NYMEX:PL1! gained 2.8% to $1,661.61, and palladium BIST:XPDUSD1! climbed 1.1% to $1,281.42. All three metals were near their highest levels in more than a week and headed for weekly gains.