Gold rises 1% as dollar pulls back after US jobs data

Gold jumped as much as 1% on Friday, closing in on $1,800, on a weakened dollar as investors weighed up prospects for a tightening of US Federal Reserve policy after the release of the monthly US jobs report.

Spot gold rose 0.5% to $1,785.89 per ounce by 9:44 am EDT (1344 GMT), after jumping to $1,794.86, its highest level since June 18. US gold futures gained 0.8% to $1,791.00.

Data showed US job growth accelerated in June as non-farm payrolls increased by 850,000 jobs after rising by 583,000 in May, although the unemployment rate rose to 5.9% from 5.8% the previous month.

The data follows suggestions from US Federal Reserve officials that the central bank should begin to taper its asset purchases this year.

But Phillip Streible, chief market strategist at Blue Line Futures in Chicago, said the data was unlikely to trigger a rush from the Fed to ease stimulus or begin interest rate hikes and "a lot of analysts were secretly looking for a much larger surprise build", which supported gold.

Non-yielding gold tends to fall out of favour among investors when interest rates rise as they translate into a higher opportunity cost of holding bullion.

"Gold has done a really healthy job of solidifying a bottom and we're seeing a bullish technical tailwind behind gold," Streible said, adding that gold investors were also likely expecting some weaker economic data into the third quarter.

The dollar index edged 0.1% lower off a three month peak, raising gold's appeal to other currency holders.

Also on investors radar was the highly contagious Delta variant which prompted some countries in Asia and Europe to walk back on reopening plans.

Silver rose 1.3% to $26.36 per ounce, while platinum gained 0.1% to $1,084.05. Palladium was up 0.6% at $2,779.85 and was set for a second straight weekly gain.