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Gold traded in a narrow range on Friday after touching its lowest in over two months the session before, with the dollar volatile after weak U.S. manufacturing data raised doubts on the economy's strength ahead of closely-watched payroll numbers.

Spot gold had eased 0.3 percent to $1,310.23 per ounce by 0706 GMT. The metal on Thursday hit its lowest since June 24 at $1,301.91 and was on track for its second straight weekly loss.

Other U.S. data showed initial claims for state unemployment benefits rose less than expected last week, pointing to sustained labor market strength. An upbeat nonfarm payrolls report on Friday would reinforce the view that a U.S. rate hike may be on the cards, after Fed officials sounded a hawkish note at a meeting last weekend. "A good jobs number could generate enough concern over a near-term rate rise to bolster the dollar and undercut gold, "HSBC analyst James Steel said in a note.

There will very likely be an aggressive sell-off if prices breach the $1,300-level, Alex Thorndike, senior precious metals dealer with MKS PAMP Group said.

Good to sell on rallies around $1313-1315 with a stop loss around $1323 for a take profit of $1300/$1295.

The intraday resistance is around $1320 (9-day EMA) and any violation above will take the commodity to $1323.50 (38.2%)/$1335 (21-day MA).

Major resistance is located at $1321 (9-day EMA) while major support is seen at $1302.50 (90-day EMA).

Reference: Kitco, wbponline