Gold hits two-week high

Gold hit a two-week high on Friday after fluctuating in the wake of mixed US payrolls data, and was on track for its first full weekly gain this year as investors' appetite for assets seen as higher risk wavered. Spot gold was bid at $1,352.45 an ounce at 1548 GMT, from $1,353.30 an ounce late in New York on Thursday, having earlier touched a high of $1,357.93. US gold futures for April delivery rose 20 cents to $1,353.20.
The data showed private employers added just 36,000 jobs in January rather than an expected 145,000, though the unemployment rate fell to its lowest level since April 2009. "I think the market's confused," said Credit Agricole analyst Robin Bhar. "On the one hand we didn't get any rise to speak of in the payrolls, but we got a big fall in the unemployment rate, and a big gain the manufacturing sector."
"But then we got a fall in the construction sector, so there are a lot of mixed messages being sent out." The euro extended losses to session lows against the dollar after the data, and was on track for a third negative session. Usually a consequently stronger dollar would weigh on gold, but the correlation between the two has weakened this year.
US stocks traded flat as investors attempted to reconcile conflicting messages on the US economy from the January jobs report, while European shares were a touch firmer.
Traders said the jobs picture may have been temporarily distorted by big storms in the United States. "At face value the payroll data looks negative, but with revisions and weather maybe not as bad," said Tom Bentz, a broker at BNP Paribas Commodity Futures Inc in New York. Gold is on track for a positive start to February, having posted a strong session on Thursday after comments from Federal Reserve chairman Ben Bernanke were taken to indicate that US monetary policy would stay accommodative.
The precious metal had come under heavy pressure last month after a spate of better-than-expected US data fuelled expectations for a move towards monetary tightening sooner rather than later, boosting interest in higher-risk assets. The strength of the economic recovery remains a major question mark for gold.
"The medium term factors for gold - currency debasement, sovereign debt, inflation - haven't disappeared and will come back to underpin the market," Bhar said. "But at the moment, why buy gold? There are lots of better things to buy." Asian buyers were still largely absent, with the market quiet in China, Hong Kong and Singapore during the Lunar New Year holiday there and Indian consumers put off fresh buying by Thursday's price volatility. Gold holdings of exchange-traded funds also inched higher, with those of the largest, New York's SPDR Gold Trust, edging up just over two tonnes on Thursday.
Silver was bid at $29.11 an ounce against $28.91. Holdings of the largest silver ETF, the iShares Silver Trust, fell more than 30 tonnes to their lowest since November on Thursday. Platinum group metals rallied to multi-year highs, meanwhile, with platinum reaching its strongest since July 2008 at $1,858.50 an ounce and palladium a 10-year peak at $831.
Platinum was later at $1,850.50 against $1,834.99, while palladium was at $824.97 against $817.22. "Since the beginning of the year platinum and palladium have performed better than gold and silver, with price gains in the region of 3 to 4 percent," said Natixis in a weekly note. "Versus silver and gold, the metals have outperformed by 9-12 percent. This has been helped by continued strength in demand for automobiles."