London: Gold rose to a three-week high on Tuesday after weak U.S. jobs figures raised expectations the Federal Reserve will keep its stimulus undiminished well into 2014.
Nonfarm payrolls rose by 148,000 in September, the Labor Department said, below the 180,000 forecast in a Reuters poll, increasing worries that the world's largest economy was losing momentum even before the government shutdown this month.
"We were not even close to the 180,000 number ... the main takeaway is that Fed tapering is still a long way away, probably not for this year and that's the reason why everything shot up - equities, commodities and gold in particular," Societe Generale analyst Robin Bhar said.
"The next 24 hours are crucial because on what we have just seen, gold should hold and even move higher if the dollar weakens."
Spot gold, lower initially, rebounded 1.3 percent to its highest since Oct. 1 at USD 1,334.14 an ounce. It was trading up 1.2 percent at USD 1,332.11 an ounce by 1402 GMT.
The metal has broken above technical resistance at its 100-day moving average of USD 1,325.
USA gold futures for December rose USD 16.50 an ounce to $1,332.10.
The dollar tumbled to a new eight-month low against a basket of currencies, while global stocks edged up on prospects of a longer spell of super-easy money from the Fed.
"...There is always that suspicion that they (the Fed) can't taper because the economy is not that strong, which could support prices," Macquarie analyst Matthew Turner said.
Gold has been boosted by increased central bank liquidity and a low interest rate environment over the past few years, which encourages investors to put money into non-interest-bearing assets.
Analysts said investor sentiment was likely to remain subdued, however, after a big drop in holdings in the largest gold-backed exchange-traded fund (ETF), SPDR Gold Trust, which saw outflows of 10.51 tonnes to 871.72 tonnes on Monday. That was the biggest one-day fall in the fund's holdings since early July.
Physical demand for gold in major consumer India remained subdued ahead of the Diwali celebrations, usually considered an auspicious time to buy jewellery.
"Importers in India are still struggling to adopt the new import and re-export (80-20) regulation while the import tax hikes have already hurt smaller jewellers," VTB Capital said.
In China, premiums to spot London prices remain near lows for the year, traders said.
In other precious metals, silver mirrored gold's moves and rose 1.5 percent to USD 22.53 an ounce.
Spot platinum was up 0.1 percent at USD 1,434.24 an ounce and spot palladium fell 0.6 percent to USD 742.97 an ounce.
Switzerland's net imports of raw platinum in September fell to their lowest in four months, as exports to China hit a three-month high at 1.903 tonnes, customs data showed.