* Gold recovers after hitting lowest since Jan. 31
* Payrolls data beats expectations, but not by enough
* GRAPHIC-2017 asset returns: tmsnrt.rs/2jvdmXl
* Coming up: FOMC meeting March 14-15
(Updates prices; adds comment, byline, NEW YORK dateline)
By Marcy Nicholson and Jan Harvey
NEW YORK/LONDON, March 10 Gold recovered on
Friday from an early drop to five-week lows after a U.S.
non-farm payrolls report for February failed to meet elevated
expectations, prompting a drop in the dollar and Treasury
The Labor Department data, which showed U.S. non-farm
payrolls rose 235,000 last month, beat official forecasts but
was not enough to satisfy those whose expectations had been
boosted by a strong private payrolls number earlier in the week.
The U.S. dollar fell against a basket of currencies
amid disappointment that wages were only growing gradually.
The figures shored up prospects for the Federal Reserve to
hike interest rates this month, however. Anticipation of a March
hike has put gold on track for its biggest weekly loss in four
months this week.
Spot gold was up 0.1 percent at $1,202.36 an ounce by
2:56 p.m. EST (1956 GMT), after falling to $1,194.55, its
weakest since Jan. 31. U.S. gold futures for April
delivery settled down 0.2 percent at $1,201.40.
"Whisper estimates for job growth were probably a bit higher
after the strong ADP (private payrolls) number," Commerzbank
analyst Carsten Fritsch told the Reuters Global Gold Forum.
"Jobs growth was stronger than expected, but wage growth
remains subdued, so the last link to higher inflation is still
Gold is sensitive to rising U.S. interest rates as these
increase the opportunity cost of holding non-yielding bullion,
while boosting the dollar, in which it is priced. The metal
remains vulnerable to signs real interest rates are increasing,
"All eyes are now on Wednesday's rate hike and what will
happen when it actually comes to fruition," said Miguel
Perez-Santalla, vice president of Heraeus Metal Management in
New York, adding that precious metals prices were holding
"Many expect this as a bullish signal but many traders are
going to the sideline, preferring to be flat over the weekend."
Pointing to softening investor appetite, holdings of the
world's largest gold-backed exchange-traded fund, SPDR Gold
Shares , fell 2.7 tonnes on Thursday, bringing the outflow
for the week so far to 6.5 tonnes.
Silver was up 0.04 percent at $16.95 an ounce, after
hitting its lowest since Jan. 27 at $16.78. It was on track to
close the week down 5.6 percent, its weakest in four months.
Palladium was down 0.1 percent at $745.90, after
falling to $739.43, the lowest since Feb. 3.
Platinum was up 0.6 percent at $937.80. However,
platinum has fallen nearly 6 percent this week, having touched
its lowest since Jan. 4 at $928.50.
(Additional reporting by Arpan Varghese in Bengaluru; Editing
by Dale Hudson and Diane Craft)