* Demand dented by fading expectations of Le Pen victory
* GRAPHIC-2017 asset returns:
By Marcy Nicholson and Jan Harvey
The dollar hit its lowest level in roughly six months against the euro despite the sharp rebound in U.S. payrolls data, which did not shake investors' bullishness toward the euro ahead of the second round of France's presidential election.
Spot gold was up 0.05 percent at $1,227.89 an ounce by 2:35 p.m. EDT (1835 GMT), but set to end the week down 3.2 percent, its biggest weekly drop since November. U.S. June gold futures settled down 0.14 percent at $1,226.90.
"The U.S. employment (data) was stronger than expected," ABN Amro analyst Georgette Boele said. "This only put gold prices slightly under pressure, because the U.S. dollar didn't rally."
Gold fell to the lowest in nearly seven weeks at $1,225.20 on Thursday after the Fed played down any threats to this year's planned rate increases, supporting forecasts of another move in June.
The metal is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.
Concerns over a victory by far-right candidate Marine Le Pen in the French presidential election, which drove gold lower last month, have faded considerably. Sunday's vote is expected to elect centrist Emmanuel Macron, whom investors favour.
"Following six weeks of fund buying, gold was left exposed as geo-risks faded, but the fact that ETPs have seen limited selling appetite could be an indication that this was mostly speculative sellers reducing longs," said Saxo Bank's head of commodities research, Ole Hansen.
Silver was up 0.2 percent at $16.31 an ounce, on track to close the week down 5.4 percent.
"While declining mine supply has supported silver, the dynamic was not sufficient to take prices higher on a sustained basis, because commercial and non-commercial demand have been too weak," said Bank of America Merrill Lynch in a report.
Platinum was up 1.1 percent at $909.10 an ounce, but on track to close the week down 4 percent. Palladium was 1.2 percent higher at $814. The spread between platinum and palladium was close to its narrowest in 15 years, having dipped below $100 an ounce this week.
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GRAPHIC-2017 asset returns:
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Additional reporting by Swati Verma in Bengaluru; Editing by Edmund Blair and Lisa Shumaker) ((Marcy.Nicholson@thomsonreuters.com, +1 646 223 6043; Reuters Messaging Marcy.Nicholson.ThomsonReuters.email@example.com))
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