NEW YORK/LONDON (Reuters) - Gold was little changed on Friday, erasing earlier losses as the dollar came under pressure from a U.S. payrolls report that flagged up weak wage growth last month, weakening the case for near-term interest rate hikes.
While U.S. job growth surged more than expected in January as construction firms and retailers ramped up hiring, wages barely rose.
Graphic - 2017 asset returns: here
Spot gold XAU= was unchanged at $1,215.75 an ounce by 2:25 p.m. EST (1925 GMT), off an earlier low of $1,207.10. U.S. gold futures GCv1 for April delivery settled up 0.1 percent at $1,220.80 per ounce.
"Markets seem to be looking at the soft wage data, which signal rather weak inflationary pressure, and therefore less need for the Fed to raise interest rates," Commerzbank analyst Carsten Fritsch told the Reuters Global Gold Forum in the wake of the report.
The U.S. dollar .DXY and 10-year U.S. Treasury yields US10YT=RR were little changed, having come off session highs.
Gold is on track to rise around 2 percent this week as the dollar headed for a fourth weekly drop on worries about Donald Trump's presidential style and a lack of clarity on rate hikes.
The yellow metal is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.
Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Shares (GLD), rose for a second day on Thursday by 1.5 tonnes to 811.22 tonnes. [GOL/ETF]
A bounce in investment to a four-year high drove a modest gain in gold demand last year, data from the World Gold Council showed on Friday, even as use of the metal in jewellery slid to its lowest since 2009 and coin and bar buying slid.
"ETF inflows were the sole driver of demand growth in 2016 – we saw the second highest inflows since 2009," the WGC's head of market intelligence Alistair Hewitt said.
Spot palladium XPD= was 1.5 percent lower at $745.75.
"Technical analysis still look bullish for the white metal," said Miguel Perez-Santalla, vice president of Heraeus Metal Management in New York.
"But the lack of liquidity and concerns that China, due to its pollution problem, may direct the auto sector towards electric vehicles looms in the shadows."
Silver XAG= was down 0.2 percent at $17.40, having reached its highest in more than 11 weeks at $17.73 in the previous session.
Platinum XPT= was down 0.4 percent at $995.85, having hit a 12-week high of $1,011.60 on Thursday.
Additional reporting by Nallur Sethuraman and Arpan Varghese in Bengaluru; Editing by Jane Merriman and Chizu Nomiyama