Gold rises after U.S. data, still set for weekly drop

By Clara Denina

LONDON (Reuters) - Gold rose on Friday, while still on course for its second week of losses in three, as investors focussed on a decline in U.S. labour force participation in an otherwise robust jobs report.

Non-farm payrolls data showed the U.S. economy added 288,000 jobs in April, beating a 210,000 consensus forecast.

That was the largest gain since January 2012, but the share of working-age Americans looking for jobs fell 0.4 percentage point to the lowest level since last December.

"The market is also looking at the negatives in the report, which is the lack of wage participation," Quantitative Commodity Research director Peter Fertig said.

"I regard today's nonfarm payrolls as incredibly good ... but that is not moving gold's prices much as the Fed is on a path that is not going to change," he added.

Spot gold rose 0.8 percent to $1,293.40 an ounce by 1439 GMT. It was down about 0.5 percent for the week.

U.S. gold futures for June delivery 0.9 percent to $1,298.60 an ounce.

Earlier in the week, the Federal Reserve said it would reduce its monthly bond purchases to $45 billion from $55 billion, a widely expected decision that keeps it on track to end the program as soon as October.

"For gold, the salience of the nonfarm payrolls seems somewhat reduced by the Fed seemingly being on auto pilot with regards to its tapering activity," Macquarie analyst Matthew Turner said.

In wider markets, 10-year U.S. Treasury yields moved higher, after hitting two-month lows in the previous session. Returns from U.S. bonds are closely watched by the gold market, given that the metal pays no interest.

On the downside, holdings in the SPDR Gold Trust dropped 2.39 tonnes to 785.55 tonnes on Thursday, after losing 4.19 tonnes on Wednesday.

The fund saw an outflow of 25 tonnes in April, the first monthly outflow after two months of inflows and worst since December. Its movements are a good measure of underlying investor sentiment.

In the physical markets, demand has picked up slightly this week but was still lower than last year's levels.

With markets in top buyer China closed for a holiday, investors are looking to India, the second-biggest consumer, for support.

India is celebrating Akshaya Tritiya on Friday, the second-biggest gold buying festival when it is considered auspicious to buy gold.

Silver was up 0.9 percent at $19.15 an ounce but still on track for its worst performance in five weeks. Spot platinum was up 0.4 percent to $1,423.00 an ounce, while spot palladium rose 0.1 percent to $810.50 an ounce.

(Additional reporting by A. Ananthalakshmi in Singapore; editing by Jason Neely and Jane Baird)