Gold Rises as Traders Weigh Data, Fed Course

Gold rose on Monday after a weak U.S. jobs report raised questions over economic recovery, which could potentially slow the pace of the Federal Reserve's stimulus tapering.

Attention will now switch to the first testimony from the new head of the Federal Reserve, Janet Yellen, to the House on Tuesday and the Senate on Thursday, hoping for reassurance that policy will stay loose for a long time to come.

"From a macro data perspective Yellen's testimony is the main event because it's her first big official speech," Standard Bank analyst Walter de Wet said.

"The market perception is that she is a dove and that should be at least on the margin positive for gold ... but this may turn out to be a non-event for the fact that everybody expects it to be quite dovish."

Spot gold rose 0.5 percent to $1,272.40 an ounce by 1111 GMT, after gaining 1.9 percent in the previous week, its largest weekly increase since Jan. 3.

U.S. gold futures for February delivery were up $9.40 to $1,272.10 an ounce.

Technically, prices managed to break above the 100-day moving average of $1,267 an ounce and the next target is the 200-day moving average at $1,307, de Wet said.

European equities steadied and the dollar was down 0.1 percent against a basket of main currencies as data on Friday showed that U.S. job creation slowed sharply over the past two months, turning in the weakest performance in three years.

"The poor payrolls data inhibits the market from pricing in an acceleration of Fed tapering," UBS said.

"But there is one clear positive amidst the frustration and one which receives scant focus: gold remains negatively correlated with risk... This relationship has been gold's best selling point this year."

Earlier this month, the Fed decided to trim its bond purchases by another $10 billion as it stuck to a plan to wind down its stimulus programme despite recent turmoil in emerging markets and a mixed bag of economic data.

The U.S. central bank has said it aims to finish the tapering by the end of this year depending on the health of the labour market.

Gold, often seen as a safe-haven investment, lost 28 percent of its value last year as the U.S. economy showed continued signs of recovery, prompting the Fed to begin scaling back its bond-buying stimulus measures.

Major U.S. data includes retail sales on Thursday where a flat result is forecast due partly to bad weather and a rise in gasoline prices.

CHINA CONSUMPTION

Consumer demand in China, the biggest bullion consumer, topped 1,000 tonnes for the first time in 2013, an industry body said on Monday.

However, demand is expected to drop slightly this year from the record levels seen in 2013.

China's gold output in 2013 also reached a record high of 428.16 tonnes, making the country the world's biggest producer for a seventh straight year.

Gold premiums on the Shanghai Gold Exchange for 99.99 percent purity gold rose to about $12 from $11 on Friday.

Silver was up 0.9 percent to $20.15 an ounce. Prices rose 4.6 percent last week, the biggest gain since mid-August.

Platinum was trading up 0.4 percent at $1,384.40 an ounce, while palladium gained 1.2 percent to $716.50 an ounce. (Additional reporting by A. Ananthalakshmi in Singapore; editing by William Hardy)