LONDON: Gold rose for a second day on Monday, drawing strength from investor concerns over the outlook for US growth after Friday's surprisingly weak employment data and a decline in the dollar to one-month lows.
US employers hired the fewest number of workers in eight months in May and the unemployment rate rose to 9.1 percent, stoking worries that economic growth may be faltering and supporting sentiment in gold, which is seen as a safe-haven investment during times of economic uncertainty.
Spot gold edged up 0.1 percent to $1,543.49 an ounce by 0945 GMT, building on three consecutive weeks of gains.
US gold rose 0.2 percent to $1,544.80.
Uncertainty as well over the future of Yemen, while President Ali Abdullah Saleh was recovering from injuries sustained in an attack on his palace on Friday, unnerved markets.
"When you've got geopolitical factors, what's going on in Yemen and elsewhere and still very high energy prices, you don't want to be short of gold," said Credit Agricole analyst Robin Bhar.
"If anything, you want to put more cash into gold as a safe-haven store of value, because we don't know what is coming around the corner in terms of growth."
Greece's campaign to secure another bailout to avoid default added to investor worries. International lenders on Friday said Athens was likely to get a fresh multi-billion euro lifeline next month, but there remained enough uncertainty to whet investor appetite for a safe haven.
DEMAND PICKS UP
Reflecting the improvement in demand for gold in what is traditionally a period of slower consumption was the largest increase in speculative holdings of gold futures in 13 months last week, according to data from the US Commodity Futures Trading Commission (CFTC).
The net non-commercial position in gold, often used as a proxy for speculative activity, staged its largest weekly rise since April 2010.
Meanwhile, global holdings of gold as tracked by Reuters showed a second net weekly inflow, up 23,9400 ounces to 64.597 million ounces.
"The weak US data has increased the possibility of a third round of quantitative easing," said Ong Yi Ling, an analyst at Phillip Futures.
"I think it is premature to say we will see a third round. But if the Fed (US Federal Reserve) signals that there may be, it will be the catalyst pushing gold to $1,550 and beyond."
Also helping to keep gold steady was the decline in the dollar against a basket of currencies to a one-month low after last week's employment figures reinforced the notion that US rates will stay low for an extended period of time.
Spot silver rose 1.4 percent to $36.75, after having touched 1-1/2 week lows in the previous session.
Silver prices have fallen by more than a quarter since hitting a record $49.51 on April 28 but are still up 19 percent on the year, compared with gold's 9 percent rise.
Holdings in the iShares Silver Trust, the world's largest silver-backed exchange-traded fund, dropped to an eight-month low of 9,885.4 tonnes by June 3.
Platinum was last up 0.2 percent at $1,813.80 an ounce, while palladium was up 0.6 percent at $784.72.
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Copyright Reuters, 2011
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