By Clara Denina
LONDON (Reuters) - Gold rose on Monday after a weak U.S. jobs report last week raised questions over economic recovery, which could potentially slow the pace of the Federal Reserve's stimulus tapering.
Attention this week will switch to the first testimony from the new head of the Federal Reserve, Janet Yellen, to U.S. lawmakers hoping for reassurance that policy will stay loose for a long time to come.
Yellen will address the House Financial Services Committee on Tuesday and the Senate Banking Committee on Thursday.
"Gold is looking to challenge the $1,280 area, gaining some support from a weaker dollar...but the market is cautious as it awaits Yellen's testimony," Societe Generale analyst Robin Bhar said.
"Some of the soft economic reports in the U.S. may mean that the Fed will hold off easing further in the March meeting but all depends on data flows between now and then."
The Fed's Federal Open Market Committee (FOMC) meets on March 18-19.
Spot gold rose 0.6 percent to $1,274.60 an ounce by 1524 GMT, after gaining 1.9 percent in the previous week, its largest weekly increase since January 3.
U.S. gold futures for February delivery were up $11.50 to $1,274.40 an ounce.
Global equities were mixed and the dollar was little changed against a basket of main currencies as data on Friday showed U.S. job creation slowed sharply over the past two months, turning in the weakest performance in three years.
"The poor payrolls data inhibits the market from pricing in an acceleration of Fed tapering," UBS said.
"But there is one clear positive amidst the frustration and one which receives scant focus: gold remains negatively correlated with risk... This relationship has been gold's best selling point this year."
Earlier this month, the Fed decided to trim its monthly bond purchases by another $10 billion as it stuck to a plan to wind down its stimulus programme despite recent turmoil in emerging markets and a mixed bag of economic data.
The U.S. central bank has said it aims to finish the tapering by the end of this year depending on the health of the labour market.
Gold, often seen as a safe-haven investment, lost 28 percent of its value last year as the U.S. economy showed continued signs of recovery, prompting the Fed to begin scaling back its bond-buying stimulus measures.
Major U.S. data includes retail sales on Thursday where a flat result is forecast due partly to bad weather and a rise in gasoline prices.
CHINA CONSUMPTION
Consumer demand in China, the world's biggest bullion consumer, topped 1,000 tonnes for the first time in 2013, an industry body said on Monday.
However, demand is expected to drop slightly this year from the record levels seen in 2013.
China's gold output in 2013 also reached a record high of 428.16 tonnes, making the country the world's biggest producer for a seventh straight year.
Gold premiums on the Shanghai Gold Exchange for 99.99 percent purity gold rose to about $12 from $11 on Friday.
Silver was up 0.9 percent to $20.13 an ounce. Prices rose 4.6 percent last week, the biggest gain since mid-August.
Platinum was trading up 0.2 percent at $1,381.18 an ounce, while palladium gained 1.1 percent to $715.22 an ounce.
(Additional reporting by A. Ananthalakshmi in Singapore; editing by Keiron Henderson)
