Gold bounced back in volatile trade after hitting its lowest level on Friday, but it was heading for a weekly loss as investors digested plans by U.S. President Barack Obama to spur economic growth which could dent bullion’s safe-haven appeal.

Although the lingering debt crisis in Europe and volatile currencies are supportive for gold, the metal could take its cue from Obama’s $447 billion jobs proposal.

Spot gold hit an intraday low of $1,853.39 an ounce before rising 0.33 percent to $1,874.40 an ounce by 0644 GMT, which was still below a lifetime high of around $1,920 hit this week.

“I think Obama’s speech was actually better than expected. The market was pricing in for a $300 billion dollar package,” said Natalie Robertson, a commodities strategist at ANZ.

“Also a senior Republican said the proposal merits consideration, so that could also be seen as a sign the Republicans could pass the bill. The risk for gold is to the downside, but I think it will settle at around $1,800 to $1,810.”

Other markets shrugged off the speech and instead focused on economic data from China, with the Nikkei down more than 2 percent for the week and the dollar index off two-month highs.

U.S. gold futures jumped more than 1 percent to a high of $1,880, which helped pluck cash gold from intraday lows.

European stock index futures fell on Friday, following Asian markets lower, as Obama’s jobs package failed to entice investors back into equities amid concerns that it could be hamstrung by political wrangling.

Gold, which shrugged off China’s inflation data for August, which was within market expectations, is likely to look to U.S. stocks for direction.

“Let’s see how the U.S. stocks react, and I think nobody wants to go short at around these levels,” said a physical dealer in Hong Kong. “We don’t see much selling in the physical market, but investors do take profits at high levels.”

Investors turned their attention again to the state of the U.S. economy after Federal Reserve Chairman Ben Bernanke said the U.S. central bank “will do all it can” to boost economic growth and reduce unemployment, but disappointed investors by not offering details.

The uncertainties about global economic growth have driven gold prices to scale record highs since July, and are expected to underpin sentiment for the metal until investors are convinced the danger of recession is past.

“The lack of details on the further stimulus plans that the Fed could pursue may prompt some short-term profit taking in gold. However, in the long term, I think gold remains attractive amidst slowing growth and economic uncertainty,” said Ong Yi Ling, an analyst at Phillip Futures.

“Time will be needed before the measures proposed by President Obama are implemented and translate into growth. Effects will be lagged and it’s not going to improve the job markets so quickly.”

In the energy market, Brent crude oil edged up towards $115 a barrel on Friday, after falling more than a dollar in the previous session, supported by storm threats and Obama’s plan to revive the economy of world’s largest oil consumer. – Reuters