Gold Slips on Strong Labor Data

Robust employment data and brighter-than-predicted trade figures boosted the dollar Friday, sending gold lower, eliminating the metal's early gains.

Contracts for April delivery of bullion were slipping $4.10 to $651.40 an ounce on the Comex division of the New York Mercantile Exchange. Earlier in the session prices lifted as high as $659.80 before reversing. The exchange-traded funds that hold stores of the metal, iShares Comex Gold Trust (IAU Quote) and streetTracks Gold Shares(GLD Quote), were up a slight 0.1% and 0.2%, respectively.

At 8.30 a.m. EST the Labor Department reported lower-than-expected unemployment figures and a higher-than-expected increase in hourly earnings for February. At the same time the Commerce Department published numbers showing a smaller-than-expected trade deficit in January.

"The headline [unemployment] number was dollar strong, because it came in stronger than expected and was resilient in the face of adverse weather in February," says Ellen Beeson Zentner, a macro economist at the Bank of Tokyo-Mitsubishi-UFJ in New York.

The healthy economic news will keep pressure on the Federal Reserve to keep a lid on inflation and leave interest rates higher for longer and so keep the dollar attractive relative to other currencies.

As if on cue, the greenback strengthened after the new economic data, and so hurt gold prices, which tend to move in the opposite direction to that of the U.S. currency. One dollar was recently buying 118.07 yen, up from 117.04 yen late Thursday. The euro was buying $1.3114, down from $1.3133 previously.