Gold turns 1.5 percent higher on Ukraine tensions

By Frank Tang and Clara Denina

NEW YORK/LONDON (Reuters) - Gold rose 1.5 percent on Friday as rising geopolitical tensions and heavy short-covering helped bullion reverse a sharp sell-off after encouraging U.S. nonfarm payrolls data.

The yellow metal is now set for its biggest one-day gain in two months.

Bullion accelerated losses on fears of more violence after news broke that one man was shot dead in clashes between pro-Russian protesters and supporters of Ukrainian unity in the largely Russian-speaking port city of Odessa.

Traders said gold's ability to hold above key technical support at $1,275 an ounce set the stage for reversing initial heavy losses that followed data showing U.S. job growth had increased in April at its fastest pace in more than two years.

Last week, gold briefly fell to a three-month low under $1,270 an ounce as more investors turned bearish on expectations of a better U.S. economy and a lack of safe-haven buying.

"Going into the long weekend with London out on Monday, there was short-covering and good physical buying after a knee-jerk selloff earlier after the job data," said Thomas Capalbo, precious metals trader at brokerage Newedge.

The London gold market will be shut on Monday for the May bank holiday.

Spot gold was up 1.3 percent at $1,300.60 an ounce by 11:36 a.m. EDT (1536 GMT), after rising to $1,304.40.

Earlier, it tumbled to $1,276.60 an ounce after the U.S. governement said non-farm payroll data showed the U.S. economy had added 288,000 jobs in April, beating a 210,000 consensus forecast and marking the largest gain since January 2012.

U.S. COMEX gold futures for June delivery gained $18.80 to $1,302.20 an ounce.

Silver outperformed gold, rising 2.8 percent to $19.53 an ounce. Platinum rose 1.4 percent to $1,437.99, while palladium climbed 0.3 percent to $812.

(Additional reporting by A. Ananthalakshmi in Singapore; Editing by Jason Neely, Jane Baird and Lisa Von Ahn)