* U.S. job growth slowed sharply in September
* Gold on track to mark biggest weekly gain in six
* Treasury yields hover at 7-yr highs (Adds quotes, updates prices)
By Sethuraman N R
BENGALURU, Oct 5 (Reuters) - Gold rose slightly on Friday as the dollar softened after data showed U.S. job growth slowed in September, easing concerns about a large run-up in inflation.
Spot gold XAU= was half a percent higher at $1,204.75 an ounce at 1416 GMT. The metal has gained 0.9 percent so far this week and is on track to mark its biggest weekly gain in six.
U.S. gold futures GCv1 were up 0.5 percent at $1,207.50 an ounce.
"The weaker-than-expected jobs data is supporting the overall current mood but the numbers were not 'disappointing enough' to trigger fresh buying," said Heraeus precious metals trader Alexander Zumpfe.
"However, the data helped gold to establish itself above the pivotal $1,200 mark and I wouldn't rule out a test of this week's high at $1,208."
U.S. nonfarm payrolls increased by 134,000 jobs last month, the fewest in a year, as the retail and leisure and hospitality sectors shed employment, something the Labor Department said could have been caused by Hurricane Florence.
However, the unemployment rate fell to near a 49-year low of 3.7 percent, pointing to a further tightening in labour market conditions. this week's gains, gold prices have fallen more than 12 percent from a peak in April largely due to strength in the dollar, which has benefited from a vibrant U.S. economy, rising U.S. interest rates and fears of a global trade war.
Meanwhile, world markets steadied, as a four-year high in oil prices and the biggest weekly jump in Treasury yields since February left investors wondering where to go next.
Rising U.S. government bond yields typically weigh on precious metals, as they make Treasuries attractive to investors seeking assets that earn a return as opposed to gold, which earns nothing and costs money to store and insure.
"The labour market report is another hint that the Fed is going for a rate hike in December and further into 2019," said Peter Fertig, analyst at Quantitative Commodity Research.
"However, the rising yields also have a negative impact on stock markets and some investors might switch funds from equities."
Among other precious metals, spot silver XAG= rose 0.3 percent to $14.63, palladium XPD= rose 1.2 percent to $1,070, while platinum rose 0.2 percent to $823.10.