US MIDDAY: gold moves up

Gold edged higher early on Friday to set the stage for its largest weekly gain in a month as it was supported by gains in equities, encouraging US jobs data, worries over inflation and more coordinated liquidity actions by central banks. Gold's gains, however, were limited by technical resistance from a downward trendline connecting this year's highs. News that South Korea's central bank bought more gold in November also failed to spark buying amid lighter volume near the year end.
The metal was supported by news US unemployment rate fell to a 2-1/2 year low in November, and as equities rose after Bloomberg cited sources as saying European policymakers again appeared ready to collaborate in tackling the region's debt crisis.
"Gold investors seem more optimistic about economic recovery by looking at US jobs figures and (possible) eurozone stimulus, and more importantly the inflationary aspects of them," said George Gero, vice president of RBC Capital Markets.
Spot gold was up 0.1 percent at $1,745.69 an ounce by 1:17 pm EST (1817 GMT). It is on course to rise around 4 percent for the week, for its first weekly gain in three weeks. US gold futures for February delivery climbed $10 to $1,749.80 an ounce. Volume was in line to fall sharply below its 30-day average after investors earlier this week completed rolling their contract positions forward. Also, some trading desks have already closed their books ahead of the year end.
"Gold used to be working as a fear indicator but at the moment it's trading more or less like a risk asset. Risk is on because of the better (US) employment data and the expectations for the EU summit are very high," said Commerzbank analyst Eugen Weinberg. "Liquidity is the focus of the market. Gold's appeal as a safe haven may return only when liquidity improves and market sentiment warms up," said Hou Xinqiang, an analyst at Jinrui Futures.
Spot palladium rose 2.5 percent to $641.22 following its previous session's 5 percent rally. The autocatalyst metal was on course for its biggest weekly gain since November 2008. Helping the metal was fundamental buying following Thursday's news that a top executive of Norilsk Nickel, the world's biggest palladium maker, said he expected the market to be in a deficit in 2012 due to sharply lower Russian supplies. Silver was down 0.5 percent at $32.55 an ounce, while platinum eased 0.9 percent at $1,540.74 an ounce.