Gold rose almost 2 percent on Friday, ending the week on $1,414 an ounce just a few dollars below the all-time record, as the dollar tumbled after disappointing jobs data cast doubt on the strength of the U.S. economic recovery.

Bullion was up more than 3 percent this week, its biggest gain since April, pushed higher by lingering fears about a sprawling European and U.S. debt crisis and fund buying in commodities across the board.

David Arcobello, Senior Metal Trader at International Bullion Exchange told IBTimes that the precious metals profited from both the very disappointing job report, and shortly after the failure to get enough votes on a bi-partisan commitee's proposal to cut the U.S. fiscal deficit by $3.8 trillion until 2020.

Gold breached above $1,400 for the first time since November after the data showed U.S. nonfarm payrolls barely grew in November and the jobless rate unexpectedly hit a seven-month high, rising again towards 10 percent.

As a result, the market feels that this will mean even more deficits spending, which creates a positive atmosphere for gold because the dollar is going down on it.

The White House underlined this view by saying that the November unemployment data underscored the importance of extending tax cuts for middle-class Americans and unemployment insurance.

Economists said the weak jobs report could give fresh impetus to get a deal done, as expiry of the tax cuts without offsetting stimulus elsewhere could deal a hard blow to the fragile and limping economy.

Spot gold rose 2 percent to $1,414.50 an ounce at the market close, its biggest one-day rise in several weeks.

Silver tracked gold higher, trading up 3 percent at $29.38 an ounce

Earlier this week, gold seemed to struggle to gain upward momentum for a new test of its record high at $1,424.10 an ounce set on November 9, but set new all-time records in the pound and euro price in the light of lingering worries that Europe's debt crisis could spread to other countries following bailouts of Ireland and Greece.

Now the U.S. returned to its status as the sick man of the world with the disastrous job data, driving the gold price also in dollars towards new records.

It indicates we are not out of the woods yet in terms of what direction the U.S. economy is going to be heading, cautioned Saxo Bank analyst Ole Hansen.

We saw a lift in gold and that probably stems from the continued recovery of the euro against the dollar, he said.

The dollar dropped across the board after the bleak job picture, although persistent euro zone debt problems may limit losses, particularly against the euro.

The metal is just always going up, sometimes as earlier this week moving in tandem with the greenback as investors bought both the metal and the U.S. currency as safe havens, and now that the dollar falls again, it returns to the usual inverse correlation of Gold against the dollar.

 

Respected precious metals consultancy GFMS forecast silver would average around $30 an ounce in 2011, peaking at $35, while gold would peak at some $1,600-1,650 an ounce, and average $1,400.