* Dollar eases from seven-week high

* U.S. jobs could influence market thinking on Fed stimulus

* Coming Up: U.S. nonfarm payrolls; 1330 GMT

(Updates throughout, changes dateline from SINGAPORE)

By Clara Denina

LONDON, Jan 10 (Reuters) - Gold rose on Friday as the dollar came off seven-week highs, while investors awaited U.S. nonfarm payrolls data for clues over the health of the world's largest economy.

A strong jobs report could prompt the Fed to further reduce its bond-buying stimulus and bring forward the day it starts hiking rates. The U.S. central bank last month announced a $10 billion cut to its $85 billion in monthly asset purchases.

Gold had been boosted by central bank liquidity and a low interest rates environment, which encourages investors to put money into non-interest-bearing assets.

"It will take a few more months of good figures in terms of U.S. employment data to see the Fed accelerating the pace of tapering," Natixis precious metals analyst Bernard Dahdah said.

"If the number today significantly exceeds expectations gold may go to $1,200 or slightly below."

Spot gold XAU= rose 0.4 percent to $1,233.10 an ounce by 1110 GMT. Prices were however headed towards a 0.4 percent weekly loss, snapping two consecutive weeks of gains.

U.S. gold futures GCcv1 for February delivery were up $3.00 to $1,232.40 an ounce.

In wider markets, the dollar .DXY eased from a seven-week high against a basket of currencies, making dollar-denominated gold less expensive for holders of other currencies. USD/

But analysts expect the U.S. currency could easily rebound if data continues to support an improving U.S. economic outlook.

Economic data earlier this week, including weekly jobless claims, has already suggested that the U.S. economy is gaining steam. ID:nL2N0KJ10U

Gold lost 28 percent of its value in 2013, ending a 12-year bull run, as worries over a stimulus cut prompted investors to shift money to equities.

But a slow start in the stock markets this year has boosted gold prices to a three-week high on Monday.

LOW PRICE FORECASTS

Analysts' forecasts remain subdued and expectations are mostly for another drop in gold prices this year. Bank of America Merrill Lynch cut its 2014 average price forecast to $1,150, citing an uncertain macro-economic environment and lack of investment demand. ID:nL3N0KJ35N

Barclays said it expected gold prices to average $1,205 an ounce in 2014, mostly due to a macro backdrop of modest growth, fewer tail risks, and a stronger dollar increasing the scope for further disinvestment. ID:nL3N0KJ4L0

In the physical market, Chinese buying picked up on Friday.

Trading volumes for 99.99 percent purity gold contract

XAU9999=SGEX on the Shanghai Gold Exchange rose to over 16 tonnes from Thursday's 13 tonnes, while premiums climbed to $19 from $17.

Silver XAG= rose 0.9 percent to $19.72 an ounce.

Spot platinum XPT= was up 0.4 percent at $1,418.19 an ounce.

Palladium XPD= was up 0.2 percent at $734.25 an ounce.

Chinese passenger vehicle sales in December 2013 were 1.8 million units, up 21.5 percent year on year, Macquarie said in a report, citing data released on Thursday by CAAM.

Rising Chinese car sales should be good for palladium demand, as the metal is used in the exhaust catalysts of almost all Chinese cars.

(Additional reporting by A. Ananthalakshmi in Singapore; Editing by William Hardy)

((clara.denina@thomsonreuters.com)(+44 207 542 9420)(Reuters Messaging: clara.denina.thomsonreuters.com@reuters.net))

Keywords: MARKETS PRECIOUS/