* Gold pares gains as U.S. dollar turns positive
* Gold on track to end week slightly higher
* Silver hits two-week high
(Updates prices; adds comment, second byline, NEW YORK
By Marcy Nicholson and Zandi Shabalala
NEW YORK/LONDON, Sept 2 Gold rose more than 1
percent on Friday after U.S. jobs growth came in below
expectations, dampening the likelihood of an interest rate hike
from the Federal Reserve this month, but bullion pared gains
after the dollar turned positive.
U.S. jobs increased by a slower-than-expected 151,000 in
August, against expectations for a rise of 180,000.
Still, Richmond Federal Reserve Bank President Jeffrey
Lacker said the U.S. economy appears strong enough to warrant
significantly higher interest rates.
Spot gold jumped to a session high of $1,328.73 an
ounce after the non-farm payrolls data, and was up 0.7 percent
at $1,322.36 by 2:20 p.m. EDT (1820 GMT). It was on track to
close the week up 0.15 percent.
U.S. gold futures settled up 0.7 percent at
U.S. shares inched higher and European shares rallied after
the data gave the Fed more leeway to stand pat on interest
rates, while the dollar later turned higher and longer-dated
Treasury yields edged up.
"It remains to be seen whether gold can capitalize on the
reprieve granted by today's rather ordinary payrolls," said Tai
Wong, director of base and precious metals trading for BMO
Capital Markets in New York.
Gold 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.
"The market was not expecting such a glum number from the
U.S. ... it's evidence that the U.S. economy is still not strong
enough to sustain another rate hike and that's positive for
gold," said Jonathan Butler, commodities analyst at Mitsubishi.
"This number means rake hikes could get pushed further into
the future and gold will benefit from safe-haven buying and
expectations that the macro environment will continue to be
favorable for even longer."
Many U.S. traders are expected to be away from their desks
on Monday for the Labor Day holiday.
"A slightly higher number would have almost guaranteed a
rate hike later this month but now the guessing game will
continue," Ole Hansen, Saxo Bank analyst, told the Reuters
Global Gold Forum on Friday.
Silver was up 2.5 percent at $19.31 an ounce, a
two-week high. Platinum rose 1.1 percent at $1,054.50
while palladium gained 1.4 percent at $672.70
(Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by Susan Fenton and Andrew Hay)