Gold Settles Flat After US Payrolls Data

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Gold traded flat on Friday, ending the week with a slight gain, after data showed improvement in the U.S. economy but not enough for the Federal Reserve to halt its stimulus, analysts said.

Palladium rose more than 3 percent to a 19-month high as supply worries and booming auto demand sparked fund buying.

Increased physical deliveries in U.S. palladium futures also suggested rising demand from end-users.

Gold fell 1 percent earlier in the session after data showed U.S. employers added an encouraging 236,000 workers to their payrolls in February and the jobless rate dropped to a four-year low.

The metal later erased losses as bullion benefited from worries that across-the-board spending cuts in Washington could slow economic recovery.

"We did see light short-covering and fresh hedge-fund buying coming back in as the payrolls number was being reassessed as one that's not enough to change the Fed's policy,'' said James Steel, metals analyst at HSBC.

Spot gold inched down 46 cents to $1,577.94 an ounce, having rebounded sharply from an earlier low of $1,560.80.

For the week, gold was up 0.2 percent, ending a three-week losing streak.

settled up $1.80 an ounce at $1,576.90, with trading volume about 15 percent above the 30-day average, preliminary Reuters data showed.

(Read More: Where Is Gold Going Next?)

Upbeat U.S. data has fueled appetite for riskier assets such as equities at gold's expense. The Dow rose to an all-time high for a fourth consecutive day.

Even though a pick-up in job growth has boosted the chances of the Fed raising interest rates sooner than had been expected, it is likely to take several more months of strong employment data for the Fed to trim bond purchases and rates will not rise for at least a year after that, analysts said.

Holdings of , the world's biggest gold-backed exchange-traded fund, fell about 2 tons to a more than 16-month low on Thursday, resuming its recent sharp decline.

(Read More: Where Is Gold Going Next?)

Spot silver rose 0.4 percent to $28.98 an ounce, up almost 2 percent from a week earlier after a four-week losing streak.

Palladium Rallies

Among platinum group metals, spot palladium was up 3.4 percent at $780.97 an ounce after hitting $784.50, its highest since September 2011. It notched a rise for the week of 8.5 percent, its sharpest since December 2011.

Chart: Precious Metals

Erica Rannestad, commodity analyst at CPM Group, said palladium prices were supported by an increase in physical delivery notices in March versus the last delivery period in December. She expects palladium demand to rise in 2013.

Investors have been buying palladium exchange-traded funds briskly since the beginning of the year. Year-to-date, holdings in four major global palladium ETFs tracked by Reuters, including the U.S. ETFS Physical Palladium Shares, climbed 10 percent.

Platinum and palladium are used as auto catalytic converters to clean exhaust fumes. While palladium is widely employed in gasoline engines, platinum is a more effective autocatalyst for diesel cars.

Spot platinum was up 0.6 percent at $1,601 an ounce, on course for a 2 percent weekly gain, its biggest in a month.