US MIDDAY: gold flat

Gold traded near unchanged on Friday as the market took a breather following a five-session winning streak, but trade was choppy after a report confirming better US job growth and the unemployment rate near a three-year low. The metal is on track to post its biggest weekly gain in five weeks after gold broke ranks with a slumping euro in the last two days, with the metal more than recouping last week's losses that briefly sent it into bear market territory.
Gold prices largely see-sawed after data showed US nonfarm payrolls increased 200,000 in December and the unemployment rate dropped to a near three-year low of 8.5 percent, offering the strongest evidence yet the economic recovery was gaining steam. "Gold came under pressure because people are a bit more comfortable with the recovery of the economy, but it is going to remain rangebound until we get some significant news to push it into either direction," said Fred Schoenstein, metals trader at Heraeus Precious Metals Management.
Spot gold fell 0.2 percent to $1,617.45 an ounce by 12:00 pm EST (1700 GMT). It was still on course for a weekly rise of over 3 percent. "Gold went up after a lot of year-end liquidation last week. Money managers have to put their (gold) position back if they want to have it in their portfolio to show it to their clients," said Fred Schoenstein, metals trader at Heraeus Precious Metals Management. US gold for February delivery edged down $1.90 at $1,618.20.
The euro hit a near 16-month low against the dollar and briefly traded below $1.27 on renewed sovereign funding concerns in Europe and worries about a recession there. Even though gold and the euro went separate ways on Thursday, the 25-day correlation log between spot gold and euro was near a one-year high reached last week, indicating a strong positive link between the two in the last month.
"Although gold seems to be decoupling from the euro, a development which is supporting its recovery, we believe gold's inverse correlation with the dollar and positive correlation with the EUR (euro) will be re-established," James Steel, HSBC's chief commodity analyst, said in a research note.
Gold had been trading in lockstep with the euro in the past two months when the metal crossed into a bear market. Last week, the precious metal was briefly 20 percent below its record September high. It had lost as much as 11 percent in December, pressured by year-end liquidation by hedge funds. Spot silver fell 0.9 percent to $29.02 an ounce, headed for a weekly climb of 4.5 percent - its biggest rise in a month.