Gold rises on lower dollar, shares after U.S. data

By Marcy Nicholson and Clara Denina

NEW YORK/LONDON (Reuters) - Gold rose on Friday as the dollar and equities failed to react to a better-than-forecast U.S. jobs report, and the metal was set for the first weekly gain in four weeks as political uncertainty in Greece boosted demand for assets seen as safe.

Spot gold rose to a session high of $1,221.30 an ounce, extending gains following the U.S. data, not far from a three-week peak of $1,222.40 hit on Tuesday. It was trading up 0.8 percent at $1,218.40 by 2:33 p.m. EST (1933 GMT).

U.S. gold futures for February delivery rose 0.6 percent to settle at $1,216.10 an ounce.

Spot prices were heading for a 2.5 percent weekly gain, snapping a three-week losing streak, mostly due to global equities slumping at the start of the week on worries over developments in Greece that could see it quitting the euro.

The dollar was down 0.4 percent against a basket of currencies and European stocks remained negative after data showed U.S. nonfarm payrolls increased in December, topping expectations. The unemployment rate fell 0.2 percentage point to a 6-1/2-year low of 5.6 percent.

Despite recent improvements in the job market, investors remained focused on the fact that the minutes of the Federal Reserve's latest policy meeting released on Wednesday indicated the U.S. central bank would be patient in raising interest rates due to low inflation expectations.

"Fed doves are happy to wait until they feel inflation's rapier at the tip of their breastbone, rather than just seeing the whites of their eyes," said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.

Boston Fed President Eric Rosengren highlighted the Fed's cautious stance, saying it can likely be patient not only on the timing of the first rate hike but also on subsequent increases.

Gold, which has no yield, tends to suffer in an environment of rising interest rates.

"Gold is supported in this tight $1,200/$1,230 range because people are still a bit worried that with low inflationary pressures the Fed will not hike interest rates so soon," ABN Amro analyst Georgette Boele said.

In the physical markets, demand from China has been strong in recent weeks in the build-up to the Lunar New Year holiday in February, when gold is bought for gift-giving.

Premiums on the Shanghai Gold Exchange were hovering between $5 and $6 on Friday over the global benchmark, indicating strong buying interest.

Silver was up 0.5 percent at $16.39 an ounce, while platinum rose 0.8 percent at $1,224.75 an ounce and palladium 1.6 percent to $799.97 an ounce.

(Additional reporting by A. Ananthalakshmi in Singapore; Editing by David Evans, Dale Hudson and James Dalgleish)