Gold prices dipped on Friday as the dollar strengthened after US jobs data was weaker than expected, but still strong enough to support the case for more interest rate increases. Spot gold was down 0.2 percent at $1,308.71 an ounce at 1345 GMT, heading for a third consecutive weekly decline, while US gold futures for June delivery fell by 0.2 percent to $1,309.60.
The US employment data showed US job growth increased less than expected in April and the unemployment rate dropped to near a 17-1/2 year low of 3.9 percent. "This is a bit disappointing on the earnings front after the employment cost index we received last week. Still this is not enough for the Fed to pause. They will still hike in the June meeting," said Collin Martin, fixed income strategist at the Schwab Center For Financial Research in New York.
The dollar index rose as investors bet that the Federal Reserve will continue raising rates while other central banks will act more slowly. A stronger dollar makes commodities priced in the greenback more expensive for buyers using other currencies. Next week, gold is likely to remain supported as investors worry about a possible US withdrawal from the Iran nuclear accord, said Commerzbank analyst Daniel Briesemann.
If Washington decides to stick with the pact by a deadline of May 12, gold could be pressured, he added. "Even if gold dips below $1,300, the past has shown that there is buying interest below that level, so we don't expect gold to drop significantly for the moment." In other precious metals, spot silver fell 0.2 percent to $16.38 an ounce.
Among platinum-group metals, mainly used for catalysts that clean pollution from car exhausts, platinum shed 0.3 percent to $896.49 an ounce and was on track for a third weekly fall. Palladium fell 0.1 percent to $961. British new car registrations ended a year-long run of declines to rise by an annual 10.4 percent in April, though demand for diesel cars dropped by 25 percent in Europe's second-largest autos market.
Palladium is mostly used in catalysts for petrol vehicles while platinum is largely used in diesel cars. "Next week Chinese car sales figures are due and if this data is quite positive this could give support to palladium in particular and maybe platinum," Briesemann said.
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