Gold pared losses after falling to a one-week low on Friday, as the dollar steadied after rising on better-than-expected US jobs data. Spot gold fell as low as $645 an ounce, the lowest since June 28, before rising to $648.20/649.00 1342 GMT, against $649.30/$650.10 in New York late on Thursday.
"Gold is tracking the dollar. It moved a bit lower after the payrolls data, but it looks that there is still support at $646," a European precious metals trader said.
"Generally I think that gold should trade higher and we should test $660 next week," he added. The dollar rose for a third straight session after data showed the US economy generated more jobs than expected in June, easing concerns that the Federal Reserve may cut interest rates this year.
But the currency erased gains later during the day. Gold often trades in an inverse correlation to the dollar as some investors use the metal as a dollar hedge. Gold is also often seen as a hedge against oil-led inflation. Oil surged to an 11-month high above $75 a barrel, putting the market within reach of the all-time record of $78.65 set in August 2006.
News that the Bank of Spain sold no gold in June after running down its reserves in each of the previous three months also lifted sentiment. In May the bank sold 0.9 million ounces, or some 30 tonnes, of its gold reserves following sales of 1.3 million ounces in both March and April.
But some analysts were not that positive about gold prices. "There is no obvious upward stimulus. I see gold trading in a range next week," said a metals analyst in London.
In the physical market, shipments of gold jewellery from Turkey, one of the world's top exporters of the metal, rose 18.5 percent year on-year to 45.4 tonnes in the first half of 2007, data released on Friday showed.
Spot platinum rose as high as $1,289 an ounce and was last quoted at $1,287/1,291 an ounce, against $1,288/$1,292 in late New York trade. Silver was at $12.49/12.53 an ounce, up 1 cent, while palladium fell to $362/365 an ounce from $364/368.