(Adds details/comment, updates prices)
* Non-farm payrolls unchanged in August
* Greece aid talks put on hold
* Gold up 2.1 percent this week
By Harpreet Bhal
LONDON, Sept 2 Gold rose to a 1-1/2 week high on
Friday as investors sought refuge in safe haven assets after a
disappointing labour market report from the United States added
to mounting fears about the pace of recovery in the world's
Non-farm payrolls were unchanged in August, the U.S. Labor
Department said, the weakest reading since September. Economists
had expected the economy to create at least 75,000
Investors clung on to the precious metal as assets perceived
as higher risk sold off in the wake of the disappointing report,
with European stocks falling sharply while U.S. Treasuries
At 1403 GMT, spot gold rose 2.7 percent to $1,873.79
an ounce from $1,824.55 late in New York on Thursday. It earlier
rose to a high of $1,879.30, its highest level since hitting a
record on August 23.
Analysts said the gains were tempered by some caution about
how much further gold's rally could go following the precious
metal's strong gains in recent weeks, and a lack of large
position-taking among investors ahead of a long weekend in the
"The initial reaction on the gold price was that it traded a
bit higher after the weaker-than-expected non-farm payrolls
data," said Georgette Boele, head of forex and commodities
research at ABN Amro.
"But it didn't get the kind of boost that we have seen in
recent weeks because market players are still a bit cautious
after the volatility seen recently in gold prices."
The metal rose 12 percent in August, its strongest monthly
gain since Nov. 2009 and has hit record highs several times in
recent weeks following a run of soft economic data from the
Analysts said the weak reading in the country's labour
market strengthens expectations that the U.S. Federal Reserve
will announce further measures to prop up the flagging economy.
"Today's figures are very poor and will intensify pressure
for strong policy action - possibly further QE (quantitative
easing)," Ross Norman of Sharps Pixley said in a note.
U.S. gold GCcv1 rose 2.6 percent to $1,876.40 an ounce
Growing worries about Greece's ability to meet its deficit
targets also helped underpin gold prices.
In the latest twist in Greece's debt saga, talks between
Athens and international inspectors on whether it has met
conditions for a new aid tranche have been put on hold, after
disagreements over why and by how much its deficit cuts
programme has fallen behind schedule.
"We're seeing a new round of flight into so-called safe
haven assets. The debt problems in the euro zone are still a
worry and it offers an opportunity for market speculators to buy
gold," said Peter Fertig, a consultant at Quantitative Commodity
Gold has risen 2.1 percent so far this week, reversing a
sharp correction in the previous week. Some analysts expect a
degree of short-term correction in the precious metal after its
strong run in early August.
"Some consolidation here is healthy for gold as we simply
need more clarity on the macro side to determine if riskier bets
are on or off this autumn," VTB Capital said in a note.
"Otherwise, in the longer run bullion is still well
supported as investors are afraid to liquidate their longs amid
ongoing policy uncertainty in both the U.S. and the eurozone."
Spot silver tracked gold to rise 3 percent to $42.69
an ounce, following a 3.2 percent fall in the previous week.
Bolivia, the world's sixth-largest silver producing country
by output in 2010, plans to raise mining royalties to take
advantage of high prices and bolster the state's role in the
Elsewhere, spot platinum rose 1.4 percent to
$1,869.24 an ounce, while spot palladium slipped 0.5
percent to $775.50 an ounce.
(Editing by James Jukwey)