Gold prices surged 3% on Friday as the dollar fell after data showing an uptick in the U.S. unemployment rate in October raised optimism the Federal Reserve would be less aggressive on rate hikes going forward.
U.S. employers hired more workers than expected in October, but a rise in the unemployment rate to 3.7% suggested some loosening in labor market conditions.
"The U.S. jobs report has hit the sweet spot of what the marketplace was wanting to see and that has allowed gold prices to rally," said Jim Wyckoff, senior analyst at Kitco Metals.
Spot gold last rose nearly 3.19% to $1,684.90 per ounce. Bullion is up nearly 2.2% for the week, the biggest weekly percentage gain since end-July.
U.S. gold futures were up 3.3% to $1,684.70.
Following the jobs data, the dollar index fell 1.6%, making greenback-priced gold more appealing for overseas buyers.
The U.S. central bank on Wednesday raised interest rates by 75 basis points, but signaled they would soon scale down its aggressive rate-hike cycle as it allows time for the economy to absorb the swiftest tightening of monetary policy in 40 years.
Fed policymakers on Friday indicated they would still consider a smaller interest rate hike at their next policy meeting.
Gold is considered an inflation hedge, but high interest rates dent the non-yielding asset's appeal.
"The long variable lags of Fed tightening has traders convinced they opt for a slower pace of hikes and decide later on when to stop," said Edward Moya, senior analyst with OANDA.
"If next week's U.S. inflation report contains a downward surprise, gold might be able to make a run towards the $1,700 level."