LONDON Gold held onto the previous session's 2 percent gains on Friday as strong underlying investment demand helped prices rebound from a sharp drop in the wake of forecast-beating U.S. payrolls data.
Earlier gold hit its highest in 13 months, having been driven up nearly 20 percent this year by economic concerns, which sparked volatility in equities and oil prices and boosted gold's appeal as a haven.
That sparked strong investor interest, which continued to underpin gold prices even after the payrolls data. Spot gold was at $1,265.15 an ounce at 1354 GMT, up 0.1 percent and well off its post-data low of $1,249.90.
"Gold is overdue a correction and if this number cannot provide that, it shows how strong underlying demand continues to be," Saxo Bank's head of commodities research Ole Hansen said.
Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Shares, rose nearly 5 tonnes on Thursday, data from the fund showed, bringing its inflow for the year to 151 tonnes, versus 52 tonnes in the same period of 2015.
Investment interest has been driven by concerns over the global economy, which have dented expectations that the Federal Reserve will press ahead with fresh interest rate hikes. The Fed has indicated that further hikes will be data-driven.
Labor Department data showed on Friday that U.S. employment gains surged in February, the clearest sign yet of job market strength that could further ease fears the economy was heading into recession.
Non-farm payrolls increased by 242,000 jobs last month, while the unemployment rate held at an eight-year low of 4.9 percent even as more people piled into the labour market.
"The data was all about the future Fed move and the data released has confirmed that the Fed are not off beat with their strategy," Ava Trade's chief market analyst Naeem Aslam said.
"Now the main focus will be towards the Fed's upcoming meeting in a few weeks' time, and how they are going to play with the growth revision forecast. This will be the key element which traders will benchmark, and this will also lay down the path for a further rate hike."
Silver was up 1.1 percent at $15.39 an ounce, while platinum was up 1.2 percent at $957.74 an ounce and palladium was up 1.7 percent at $549.00 an ounce.
(Additional reporting by Manolo Serapio Jr. in Manila; Editing by Dale Hudson and Alexander Smith)
This story has not been edited by Firstpost staff and is generated by auto-feed.