Gold pared early gains and drifted down to end lower on Friday, as the U.S. dollar rebounded after early weakness.
The dollar bounced back following data from the U.S. Labor Department that showed a stronger than expected employment growth in August and an increase in average hourly employee earnings raising prospects of hike in interest rates this month. The dollar index, rose to 95.35, from a low of around 94.85 earlier in the day.
Meanwhile, disputes between the U.S. and its trade partners continue to hurt investor sentiment. Today, U.S. President Donald Trump reportedly told a columnist for The Wall Street Journal that he was "still bothered by the terms of U.S. trade with Japan."
Trump reportedly announced today that his administration intends to go ahead with tariffs on US$200 billion worth of Chinese imports. He reportedly added, "And I hate to say that, but behind that, there's another US$267 billion ready to go on short notice if I want. That totally changes the equation."
Gold futures for December ended down $3.90, or 0.3%, at $1,200.40 an ounce. On Thursday, gold futures ended up $3.00, or 0.25%, at $1,204.30 an ounce. For the week, gold futures shed about 0.5%.
Silver futures for December ended down $0.011, at $14.170 an ounce, while Copper futures declined by $0.0140, to $2.6225 per pound.
The Labor Department's report showed that non-farm payroll employment in the U.S. surged up by 201,000 jobs in August after climbing by a downwardly revised 147,000 jobs in July. Economists had expected employment to increase by about 191,000 jobs compared to the addition of 157,000 jobs originally reported for the previous month.
Despite the stronger than expected job growth during the month, the unemployment rate held at 3.9% in August compared to expectations for a drop to 3.8%.
The unemployment rate came in flat as the household survey measure of employment showed a slump of 423,000 persons and the labor force shrank by 469,000 persons.
The report also said average hourly employee earnings rose by $0.10 or 0.4% to $27.16, reflecting the biggest monthly increase seen last December. The annual rate of average hourly employee earnings growth subsequently accelerated to 2.9% in August from 2.7% in July.
"This report is strong throughout and with the economy likely to grow more than 3% again in the third quarter of this financial year, it will keep the Fed hiking interest rates with another move in September with a further increase in December," said James Knightley, Chief International Economist at ING.