Gold rallied more than 3 percent on Friday

NEW YORK (Reuters) - Gold rallied more than 3 percent on Friday, its biggest one-day rise in more than two years, as bleak U.S. employment data and a deepening euro zone crisis triggered safe-haven buying by investors who see more reasons to expect further monetary easing by central banks.
The precious metal fell in early trade, then rebounded almost $70 an ounce from its session low as funds piled into gold for portfolio protection after the U.S. unemployment rate rose for the first time in 11 months. Spain's poor finances also spurred buying, on fears that Europe's debt crisis could spiral out of control.

Gold broke its trend of trading in sync with riskier assets, rising on a day when Brent crude oil slumped below $100 a barrel and the Dow Jones industrial average fell 2 percent to turn negative for the year.
Traders said gold's safe-haven appeal was reasserting itself, noting that bullion and U.S. Treasury bonds were among the few financial assets that rose on Friday.

"It's very likely that the economic data today and what's come out of Europe has convinced the market that there will be further government monetary stimulus," said Robert Lutts, chief investment officer of Cabot Money Management with over $500 million in client assets.

"Larger institutions will commit money to gold in ways they never had before. We are talking about CALPERS, Yale and Harvard," Lutts said.

Spot gold hit a near two-week high of $1,617.11 an ounce and was up 3.1 percent at $1,611.70 at 11:39 a.m. EDT (1539 GMT), on track for its biggest weekly gain of 3 percent since late February.
U.S. gold futures for August delivery were up $48.70 at $1,612.90, with trading volume already surpassed its 30-day average at midsession, preliminary Reuters data showed.

Technical buying also powered the metal higher as Friday's gains were setting up for a bullish double-bottom pattern on charts, said Michael Matousek, senior trader at U.S. Global Investors which manages $1.7 billion in mutual fund assets.

Gold's technical outlook got much brighter after it fell close to key support at around $1,530 an ounce three times in two weeks and held each time.

Gold ended May with its fourth straight monthly decline, the longest in 12 years. Friday's dramatic rally extended gold's gain year to date to around 3 percent.

Gold gained 15 percent earlier this year after the U.S. Federal Reserve said in January it would keep interest rates near zero until at least late 2014 and could introduce a fresh round of economic stimulus or an asset-purchase program known as quantitative easing (QE).

Among other precious metals, spot silver rose 2.8 percent at $28.54 an ounce. Spot platinum was up 1.2 percent at $1,427.24 an ounce, while spot palladium edged down 0.6 percent at $604.72 an ounce. Prices at 11:39 a.m. EDT (1539 GMT)