Gold hits five-month peak as dollar slips after US jobs data

Gold prices hit a five-month peak on Friday and continued to trade close to that level as the dollar slid following weaker-than-expected U.S. jobs data that raised the possibility that the U.S. Federal Reserve might go slow on interest rate hikes next year.

Spot gold was up 0.5 percent at $1,244.03 per ounce at 09:27 am EST (1427 GMT), having hit $1,245.60 per ounce earlier, its highest since July 13. With a rise of nearly 1.7 percent this week, gold looked set to clock its best gain since at least the week of Aug. 24.

U.S. gold futures were also 0.5 percent higher at $1,249.60 per ounce. "The non-farm payroll data came out lower than expected. It is a negative pick that is causing people to hedge a little bit more in gold and any shorts are probably covering and adding few longs to the market," said Miguel Perez-Santalla, vice president of Heraeus Metal Management in New York.

The dollar eased against a basket of currencies on Friday after data showed U.S. job growth slowed in November and monthly wages increased less than expected, suggesting some moderation in economic activity. 

Interest rate futures suggested traders see fewer than one rate increase from the Fed next year, compared with previous expectations for possibly two rate hikes.

Gold, which is considered a safe investment during times of financial, economic and geopolitical uncertainty, has recovered about 7 percent from 19-month lows hit in mid-August.

"With increased volatility and geopolitical risk, macro asset allocation is becoming more gold-positive again while we believe much of the dollar`s upward move is now behind us with rate hike expectations dropping," analysts at BMO Capital Markets said in a note.

Meanwhile, spot palladium drifted further away from an all-time high of $1,263.56 hit this week. The metal was steady at $1,209.42 per ounce, having fallen 2.7 percent in the previous session, but still set to post its second straight weekly gain.

Silver gained 0.4 percent to $14.53 per ounce and was headed for a weekly rise of more than 2 percent. Platinum rose 0.8 percent to $793.60. The metal earlier hit a three-month low of $779 and extended losses for a fifth successive week.