Gold resumes its rally ahead of U.S. payrolls

The yellow metal continued its rise on Friday heading for its first weekly advance in six ahead of the release of the infamous U.S. labor report later in the day.

Gold rebounded after touching a low of $1157.97 an ounce on July 27 to $1197.31, yet it remains below strong resistance at $1200, with the bleak U.S. reports released recently which took the dollar to its lowest level in more than three months.

The U.S. economy is showing uncertainty after the weak data released over the past few months. Jobless claims rose yesterday while today a loss of 65,000 jobs in July from the drop of 125,000 a month earlier is predicted.

The shaky outlook for the economy is raising the possibility that the Fed would keep interest rate at its current low level and may continue bond purchase.

On the other hand, European economies are showing progress which caused the euro to rebound for the first time in July. The dollar index, which tracks the movement of the dollar versus a basket of major currencies, is currently trading at 80.77 doing attempts to pare some of its losses.

Although the dollar's depreciation gave a boost to dollar-denominated commodities to rebound, gold may face some pressure on profit taking and technical corrections.

Yesterday, gold shed $0.70 or 0.06% to close at $1194.72 an ounce. Gold Price was setin London on Thursday at $1192.50 per ounce during the PM fixing declining from $1195.50 during the AM fixing. SPDR gold trust, the world's largest exchange-traded fund backed by bullion, surged to 1,282.74 metric tons on August 5 from 1,281.83 on August 4.

Spot gold is traded at $1197.25 an ounce after recording a high of $1198.40 and a low of $1192.30.

Oil is still hovering above $82 a barrel trying to rise further for the fifth week, boosted by the drop in dollar and rally in stocks.