* Gold bounces off lows* U.S. non-farm payrolls post largest gain in 1-1/2 years* Slower wage growth weakens U.S. dollar (Recasts, updates prices; adds comment, NEW YORK to dateline)By Renita D. Young and Eric OnstadNEW YORK/LONDON, March 9 (Reuters) - Gold prices bounced offtheir lows on Friday after the U.S. dollar slipped against mostof its peers as slowing wage gains foreshadowed a gradualinflation increase this year.U.S. jobs growth posted its biggest increase in February inmore than 1-1/2 years. Although the data increased thelikelihood of interest rate rises, slower wage gains pointed toonly a gradual increase in inflation. The U.S. dollar index was down slightly against a basket ofcurrencies, making dollar-priced gold less expensive forpurchasers with other currencies. "Gold is (also) seeing some pent-up buying. Gold was showingover-sold conditions on the chart. I think the market waspricing in good news of better-than-expected jobs numbers," saidBob Haberkorn, senior market strategist at RJO Futures inChicago.Spot gold was unchanged on the day at $1,321.99 by1:46 p.m. EST (1846 GMT) and on track to end the week unchanged.U.S. gold futures for April delivery settled up $2.30,or 0.2 percent, at $1,324 per ounce."The strong headline payrolls numbers suggest the Fed may doa little more. I think there's certainly no risk they're goingto do less than three (rate increases)," said Steven Ricchiuto,chief economist at Mizuho Securities USA in New York.
Gold is highly sensitive to rising U.S. interest rates,because they make bullion less attractive since it does not payinterest.Slow wage growth, however, could temper expectations thatthe Fed will raise its rate forecast to four hikes this yearfrom three. There is optimism that tightening labor marketconditions will spur faster wage growth and pull inflationtoward the Fed's 2 percent target. News that U.S. President Donald Trump agreed to meet NorthKorea's Kim Jong Un in what would be the first face-to-faceencounter between the countries' leaders somewhat pressuredgold. "If, with this news, the tension with North Korea is easing,it's something that is, maybe not headwinds, but a mild breezeagainst gold," said Norbert Rucker, head of commodity researchat Julius Baer in Zurich.
The reaction has been muted because gold had failed to showstrong safe-haven demand last year during months of insultsexchanged over the North's nuclear and missile programs, henoted.
Silver , meanwhile, increased 0.6 percent at $16.60 anounce, poised for a 0.6 percent weekly increase. Platinum gained 1 percent at $961.40 per ounce, ending the week down 0.4percent. Palladium was up 1.6 percent at $992 per ounce,but unchanged from the prior week. (Additional reporting by Eileen Soreng in BengaluruEditing by Elaine Hardcastle and Dan Grebler)
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