Spot gold was steady at $1,717.49 per ounce, as of 0712 GMT, having hit its highest since April 27 at $1,721.76 in the previous session.

 Gold was hovering near a two-week high on Friday as investors awaited the U.S. jobs report to gauge the health of the economy after grim economic data raised the prospects of more rate cuts by the Federal Reserve.

Lower interest rates would further weigh on bond yields and boost demand for non-yielding bullion.

Spot gold was steady at $1,717.49 per ounce, as of 0712 GMT, having hit its highest since April 27 at $1,721.76 in the previous session. U.S. gold futures added 0.2% to $1,729.70.

The metal gained about 2% on Thursday on the back of bleak U.S. economic data, which along with uncertainties over global economic recovery and U.S.-China relations. So far this week, gold is up about 1%.

"Gold is still bouncing around in the $1,650 to $1,750 an ounce range of the last month or so. Serious investors interest should not be piqued until gold comprehensively challenges either of those levels," said Jeffrey Halley, senior market analyst at OANDA.

Millions more Americans sought unemployment benefits last week, with the total number of people who have filed claims since March 21 rising to about 33.5 million, data showed on Thursday.

U.S. nonfarm payrolls data, due at 1230 GMT, is forecast to have plunged by a historic 22 million in April, which would blow away the record dive seen during the 2007-2009 recession.

"Record non-farm payrolls data could lead to further global economic uncertainty, that is likely to support gold prices," said Hareesh V, head of commodity research at Geojit Financial Services.

"In the medium to long term, investors are likely to remain invested in gold as a safe market because of the recession fears that are likely to continue for many months."

Financial markets began pricing in a negative U.S. interest rate environment for the first time, while the Bank of England kept the door open on Thursday for more stimulus next month.

"Funds futures fell overnight, signalling lower rates ahead that fed through to the U.S. dollar, which saw profit taking on longs overnight," said Halley, adding that this created a positive environment for gold.

The dollar index turned negative, while the U.S. Treasury yields fell from three-week highs, with the two-year yields dropping to record lows.

Elsewhere, palladium jumped 2.1% to $1,895.40, platinum rose 0.2% to $764.74 per ounce.

Silver was flat at $15.50 per ounce, having hit a three-week peak.

(Reuters)