 "Gold up 6.7% in Jan on renewed prospect as safe asset")
Gold was steady on Friday after falling to its lowest in over two months the session before, with the dollar slipping as weak US manufacturing data raised doubts on the economy's strength ahead of closely-watched non farm payroll numbers.
"(The Federal Reserve head's) comments from last week have put pressure on gold and we need to see the jobs data, which is likely going to be really good," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
US factory activity contracted in August for the first time in six months as new orders and production tumbled, but a low level of layoffs continued to point to a pickup in economic growth in the third quarter.
Other US data showed initial claims for state unemployment benefits rose less than expected last week, pointing to sustained labour market strength.
Spot gold was largely unchanged at $1,314 per ounce by 0414 GMT. The metal on Thursday touched its lowest since June 24 at $1,301.91 and was on track to end the week lower for the second straight week.
US gold futures were steady at $1,317.50.
An upbeat non farm payrolls report on Friday would reinforce the view that a US rate hike may be on the cards, after Fed officials sounded a hawkish note at a meeting last weekend.
"A good jobs number could generate enough concern over a near-term rate rise to bolster the dollar and undercut gold," HSBC analyst James Steel said in a note.
"After Friday, the US will enter a three-day holiday weekend which may prompt further book squaring for gold."
Gold is highly sensitive to rising US interest rates which increase the opportunity cost of holding non-yielding bullion while boosting the dollar in which it is priced.
The dollar was on the back foot on Friday. The dollar index, which measures the greenback against a basket of currencies, slipped to 95.619. [USD/]
Spot gold looks neutral in a range of $1,303-$1,318 per ounce, and an escape could suggest a direction, according to Reuters technical analyst Wang Tao.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell for a third straight session. Holdings dropped 0.57 per cent to 937.89 tonnes on Thursday.
Spot silver rose 0.6 per cent to $18.95 an ounce.
Platinum was up 0.6 per cent at $1,049.35. It earlier touched its lowest since July 1 at $1,035.15. Platinum was heading for its fourth straight weekly loss.
Palladium rose 0.5 per cent to $666.72, after falling to a six-week low of $654.72.
