Gold rises as trade hopes dent dollar; eyes on U.S. jobs data

By Swati Verma

BENGALURU (Reuters) - Gold prices rose slightly on Friday, setting the market on course for a fifth week of gains, as the dollar retreated amid expectations of a thaw in U.S.-China trade tensions.

Investors were awaiting U.S. jobs data for fresh clues on the economy.

Spot gold was up 0.2 percent at $1,235.53 per ounce by 1207 GMT. U.S. gold futures were down 0.1 percent at $1,237.30 per ounce.

According to a Reuters survey of economists, non-farm payrolls probably rose by 190,000 jobs in October after a 134,000 increase in the previous month.

World share markets roared higher, while the dollar eased, as hopes built that the United States and China were starting to repair their badly damaged trade relations.

"Markets are reacting positively to the news of (U.S. President Donald) Trump seeking a deal with China, also because this is pulling down the U.S. dollar, which is a good factor for gold," ActivTrades chief analyst Carlo Alberto De Casa said.

"From a technical point of view, there could be space for further rallies, especially if there is further trouble for stocks."

Gold prices jumped about 1.5 percent in the previous session, as the dollar retreated sharply from a 16-month high hit on Wednesday.

Attention is turning to the U.S. congressional elections on Nov. 6, which will determine whether the Republican or Democratic party controls Congress, with some predicting increased market volatility on the outcome.

"The return of risk appetite could be a bearish sign for gold, given how it's benefited from its safe-haven status as of late," Craig Erlam, senior market analyst at OANDA in London, said in a note.

"That said, if this is accompanied by real progress on Brexit and Italy, and improved sentiment towards those currencies on the back of it, then a weaker dollar could give gold another lift and keep it elevated."

Meanwhile, holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.9 percent on Thursday to 760.82 tonnes, the highest since late August.

Among other precious metals, platinum climbed 1 percent to $865.40 per ounce, having touched its highest since June 27 at $867.30 earlier in the session. The metal was up about 4 percent for the week so far.

Palladium rose 1.7 percent to $1,112.40 per ounce and silver was up 0.5 percent at $14.81 per ounce.

(Reporting by Swati Verma in Bengaluru; Editing by Dale Hudson and David Evans)