LONDON (Reuters) - Gold bounced on Friday from the lowest in nearly 17 months after weak U.S. jobs data pushed the dollar lower and a Chinese central bank move lifted its currency.
Spot gold was up 0.5 percent at $1,214.02 an ounce by 1300 GMT, erasing losses after earlier dropping to its lowest since March 15 last year at $1,204.
U.S. gold futures rose 0.2 percent to $1,222.30 an ounce on Friday.
The dollar index slipped into negative territory after data showed U.S. job growth slowed more than expected in July, likely due to companies’ struggles to find qualified workers.
Earlier, the dollar had climbed to a two-week high against a basket of major currencies and scaled a 14-month peak versus the Chinese yuan.
China’s offshore yuan also reversed, rising sharply after the forward foreign exchange risk reserve requirement ratio was hiked to 20 pct from zero.
“I think gold is close to bottoming out. Whether its $1,200, $1,210 or $1,190, it’s impossible to tell,” said Georgette Boele, commodity strategist at ABN AMRO in Amsterdam, adding that speculators will probably want to test the $1,200 level.
“Gold is getting cheap and positioning wise, that should be a reason for bottoming out. The shorts are relatively big.”
Spot gold may fall towards the next support at $1,194, as it has resumed its downtrend from $1,309.30, according to Reuters technical analyst Wang Tao.
Weighing on the market was a report by the World Gold Council showing that global demand fell 6 percent in the first half of the year to the lowest level for the period since 2009.
“As long as the dollar remains strong – we believe another couple of months – demand should stay soft and prices should trade rather range-bound,” Julius Baer analyst Carsten Menke said in a note.
Among other precious metals, silver rose 0.9 percent to $15.44 an ounce, platinum climbed 1.4 percent to $833.10 an ounce while palladium gained 0.8 percent to $918.50 an ounce.
Additional reporting by Apeksha Nair in Bengaluru; Editing by Kirsten Donovan and Jon Boyle