Gold rose nearly 1 percent in heavy trading on Friday, reversing early sharp losses, lifted by higher crude oil and U.S. equities' following an encouraging U.S. job report.

Bullion, which was flat for the week, initially tumbled in the face of a dollar rally and fading hopes of further U.S. monetary stimulus after a third straight monthly growth in U.S. employment.

The metal later staged an impressive $40 turnaround to close above $1,700 an ounce. Gold price volatility has been increasing after a 5-percent drop last Wednesday when Fed Chairman Ben Bernanke did not signal more easing was on the way.

One money manager said investors have not completely ruled out further quantitative easing based on anaemic U.S. growth and a lack of confidence in Europe to resolve its debt crisis.

"Even though the (job) number looks good, there's not an overwhelming sense that there's going to be great times ahead," said Jeffrey Sica, chief investment officer of SICA Wealth Management with more than $1 billion in assets.

"As long as the 'quantitative easing devaluating the dollar scenario' is present, it will support the gold price," Sica said.

Spot gold gained 0.7 percent on the day to $1,710.81 an ounce by 2:58 p.m. EST (1958 GMT), having fallen to a session low of $1,677.34, which is a six-week low.

Gold was flat for the week, as its gains on Friday have largely wiped out losses from earlier this week.

U.S. gold futures for April delivery settled up $12.80 at $1,711.50 an ounce, with trading volume in line to be second heaviest for the week, and 5 percent above its 30-day average, preliminary Reuters data showed.

Spot silver rose 1 percent to $34.20 an ounce.

Gold initially fell 1 percent toward its 200 DMA on news U.S. employers added more than 200,000 workers to their payrolls for a third straight month in February, a sign the economy was strengthening.

Some analysts are more bearish on gold's outlook after several sharp pull backs and said the metal could test $1,650 an ounce, an areas of support from its previous correction.

"This is another nail in the QE coffin, and as such is non-supportive for gold," Ole Hansen, senior manager atSaxo Bank, said. "Confidence has been shaken this week, and it looks like more long liquidation lies ahead.

Also lifting the metal was Greece's averting an immediate default after its bond swap offer to private creditors. Technical buying also helped after prices rebounded off their key 200-day moving average.

RESILIENCY

Analysts said that gold was earlier pressured by data showing China's economy is on course for a soft landing. However, the news also cheered investors as it gave room for Beijing to loosen policy further to support growth.

"Despite the severity of the early steep losses, we have already seen fairly decent buying coming in, and the firm oil prices were helping," said James Steel, chief commodity analyst at HSBC.

"Gold is showing a lot of resiliency and it may rebound as emerging-market demand is gradually reviving," Steel said.

The metal's midday rally was particularly impressive with the dollar index up more than 1 percent and as WallStreet and crude oil later pared gains.

The gold price is up 9 percent so far this year, building on 11 consecutive years of increases, after the Fed said in January it would keep rates near zero until at least late 2014.

Among platinum group metals, platinum was up 1.3 percent at $1,679.24 an ounce, and palladium gained 0.2 percent at $700.72 an ounce.

RESOURCE Reuters