* Data suggests recovery in U.S. jobs market is fragile
* Spot gold may fall to $1,625.79 -technicals
* Coming up: euro zone producer price index for Nov at 1000
By Rujun Shen
SINGAPORE, Jan 7 Gold inched up on Monday off
the previous session's four-month, boosted by lacklustre U.S.
jobs data which supported expectations for continued monetary
easing from the Federal Reserve.
The unemployment rate remained at a lofty 7.8 percent in
December, even though U.S. employers kept their pace of hiring
steady, suggesting fragile improvement in the labour market.
Gold dropped to $1,625.79 on Friday, its lowest since
August, after minutes from the Fed's last meeting showed
officials were increasingly concerned about the impact of
quantitative easing on financial markets.
The prospect of a possible suspension of monetary easing
spooked gold investors who had expected the central bank to keep
pumping cash into the market - a key driver behind the metal's
twelfth year of gains in 2012.
"There is still hope for gold," said a Sydney-based trader.
"I'm much less sanguine about the state of the U.S. economy, as
some of the leading indicators are suggestive of a slowdown in
U.S. payrolls growth and a stalling in the drop in the
The Fed will have to maintain its monetary stimulus as a
result, he said, helping gold remain attractive to investors
worried about that rampant cash printing by the central bank
could debase paper money and fuel inflation.
Spot gold had inched up $1.45 to $1,657.90 an ounce
by 0728 GMT, after falling for two sessions straight and ending
last week little changed.
U.S. gold gained 0.6 percent to $1,658.60.
Technical analysis was less upbeat. Spot gold could revisit
last Friday's low of $1,625.79 during the day, as indicated by
its wave pattern and a Fibonacci ratio analysis, said Reuters
market analyst Wang Tao.
"We think gold still has a chance of breaking above $1,800
and even reach $1,900 in the first half of the year due to
fragile economic recovery in the United States and easing
policies by central banks," said Li Ning, an analyst at Shanghai
But prices may weaken in the second half if the global
economy gets on a steady path to recovery and stimulus measures
taper off, she added.
For now, strong physical buying in India, China and
Southeast Asia also helped underpin prices.
Hedge funds and money managers increased the size of their
net longs in gold futures and options in the week to Dec. 31,
ending two weeks of declines, Commodity Futures Trading
Commission data showed on Friday.
Elsewhere, sales of U.S. American Eagle gold coins in 2012
were the weakest in five years despite a strong finish, hurt by
declining price volatility, dealers said.
Precious metals prices 0728 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1657.90 1.45 +0.09 -0.99
Spot Silver 30.24 0.03 +0.10 -0.13
Spot Platinum 1561.50 9.40 +0.61 1.73
Spot Palladium 687.00 4.20 +0.62 -0.72
COMEX GOLD FEB3 1658.60 9.70 +0.59 -1.03 24549
COMEX SILVER MAR3 30.27 0.32 +1.08 0.13 6129
COMEX gold and silver contracts show the most active months
(Editing by Miral Fahmy)