Gold prices jumped on Friday after US non-farm payrolls data missed expectations, curbing expectations that the Federal Reserve is set to start paring back its $85 billion monthly bond-buying programme.
The dollar fell against a basket of currencies after data showed US job growth was less than expected in August and the unemployment rate dropped to a 4-1/2 year low as workers gave up their job search.
That has tempered expectations the US recovery is strong enough to allow the Fed to taper asset purchases as soon as this month. The Reserve Bank of India (RBI) holds a two-day policy meeting on Sept 17-18.
Gold leapt nearly 2 percent to a high of $1,392.46 an ounce in the immediate wake of the data, and was up 1.5 percent at $1,386.74 at 1448 GMT. Earlier it hit a low of $1,362.55, its weakest since August 22.
"The immediate response of gold and the other precious metals to today's NFP data has been predictable," Mitsui Precious Metals analyst David Jollie said. "They were worse than expected, and this suggests that tapering of America's quantitative easing programme could be further into the future than had previously been expected.
"As a result, precious metal prices have rallied on expectations of a little further QE, relatively loose monetary policy and potential for longer term QE-derived inflation."
US gold futures for December stood at $1,387.20 an ounce, up $14.20.
The Fed's stimulus has been a major driver of gold's rally of recent years, as the metal benefited from increased central bank liquidity and a low interest rate environment.
But expectations that this could soon come to an end contributed to gold's 17 percent fall this year.
Gold rose to a 3-1/2 month high of $1,433.31 an ounce in late August on safe-haven buying after the United States and its allies looked close to launching an imminent military strike on Syria.
Prices retreated after Britain's parliament voted against any involvement, but geopolitical tensions continued to underpin gold as Obama and Russia's Vladimir Putin spoke on Syria at the G20 summit in Moscow.
SOUTH AFRICAN STRIKE ACTION ABATES
South Africa's National Union of Mineworkers said on Friday that most of the strikers in the republic's gold mining industry have agreed to return to work after accepting the latest wage offer from employers, though those from Harmony Gold remained on strike.
Gold futures in number one gold consumer India extended losses earlier on Friday to hit their lowest in nearly two weeks