Gold rose on Friday after data showed U.S. employment fell for the first time this year in June, with bargain hunting after the previous day’s price drop also helping lend support to the market.
Spot gold was bid at $1,206.35 an ounce at 1530 GMT against $1,198.65 late in New York on Thursday. U.S. gold futures for August delivery rose 60 cents to $1,207.30.
“The market seems to be giving a muted reaction to the non-farm (payrolls) data, which largely came in line with expectations,” said Pradeep Unni, senior analyst at Richcomm Global Services.
“The U.S.-led global economic recovery seems to hitting bigger barricades and this worry must support gold,” he said. “If stocks stabilize, then expect the slow steady rise in gold.” But support for the metal must hold at $1,178, he added.
European shares pared gains on Friday afternoon and U.S. stocks were little changed after the U.S. non-farm payrolls data.
The report showed U.S. private payrolls rose less than expected in June, while overall employment fell for the first time this year as thousands of temporary census jobs ended, showing the recovery is failing to gain traction.
The dollar fell against the euro, extending the previous day’s steep losses on concerns over the pace of recovery.
In the medium term, fears for a double-dip recession could fuel demand for gold as a haven from risk, analysts said.
But in the short run such buying has softened as concerns over the financial health of the euro zone, the main price driver for gold earlier in the year, have diminished.
“The dampening of this variable, at least in the short term, has temporarily eroded some of gold’s safe haven desirability,” said UBS analyst Edel Tully in a note.
Holdings of the world’s largest gold-backed exchange-traded fund, New York’s SPDR Gold Trust, eased a touch on Thursday for the first time in nearly a month. They remain near record levels, however.
SPDR had its biggest percentage inflow in the quarter to end-June since the record-breaking first three months of 2009, according to data released by the fund, though the pace of growth slowed towards the end of the quarter.
Lower prices are attracting some gold buyers back to the market on Friday, however. Afshin Nabavi, head of trading at MKS Finance in Geneva, said demand for physical gold at lower prices had been “very, very good.”
“We had a big correction, but there has been no change of the fundamentals, political or economic,” he said. “It’s a good oportunity to take up some gold.”
Gold recorded its biggest one-day fall in five months on Thursday, sliding nearly 4 percent to a five-week low, as funds sold bullion to cover losses in other markets like equities.
Thursday’s price dip also attracted Indian buyers back to the market, with gold traders in the world’s biggest bullion consumer picking up bargains ahead of a second round of festivals starting in August.
“We priced in more than 300 kgs of gold since yesterday evening,” said an official with a state-run bank bullion dealing bank. “Everybody is coming, be it domestic trader, exporter.”
Silver was at $17.72 an ounce versus $17.75, platinum was at $1,495 versus $1,501 while palladium was at $426.50 versus $430.50.
Platinum group metals markets are digesting news of flat U.S. auto sales in June, as major automakers said they saw no sign of the definitive second-half recovery the battered industry had expected early in the year.
