) --

Gold prices

ended slightly lower Friday as investors digested gold's violent and sudden rally Thursday and an underwhelming report on jobs.

Gold for April delivery lost $4 to $1,349 an ounce at the Comex division of the New York Mercantile Exchange. The spot gold price traded as high as $1,361 and as low as $1,345.50. The spot gold price was shedding more than $7, according to Kitco's gold index.

The U.S. dollar index was rising 0.37% to $78.10 as the euro slipped to $1.35 vs. the dollar.

Gold prices had been shielding themselves for a good jobs number with the unemployment rate expected to rise to 9.5% because more people entered the labor force while the private sector is expected to add 160,000 jobs. However, the

U.S. economy added only 36,000 jobs and the unemployment rate dropped to 9%

. Still,

Wall Street seemed to shrug off the data

which put some pressure on gold prices.

Monthly jobs data is a lagging indicator. Better manufacturing data, factory orders, and higher activity in the service sector all point to economic expansion with the labor market to follow.

Vote: Where will gold prices finish in 2011?

Digesting the jobs number is the least of investors' worries. Gold prices popped 1.5% Thursday thanks largely to Ben Bernanke and Jean-Claude Trichet. Both central bank leaders reiterated their commitment to low interest rates despite acknowledging rising food and energy prices.

Although the headlines were nothing new, rumors had been circulating that

Federal Reserve

Chairman Bernanke would raise rates as the U.S. economy strengthened and European Central Bank President Trichet would also curb growth to fight inflation, which he particularly detests.

Trichet said he was more committed to growth than fighting higher prices for the short term, and Bernanke said that a recovery isn't truly established until there is a long period of stronger job creation and that it would take years for the unemployment rate to dip below 6%. The commitment to low rates, underscored by today's jobs number, was a green light for gold buyers.

Low rates and rising inflation equal negative real interest rates in which paper money is worth less. Typically, investors protect their wealth with gold.

Jon Nadler, senior analyst at

, also blames short-covering and opportunistic fund buyers looking to buy gold at lower prices. If the majority of Thursday's rally was technical, then traders could ditch gold just as fast as they bought it.

George Gero, senior vice president at RBC Capital Markets, also says any rally in gold this week was short covering. "But very interesting to note, gold futures open interest up 3,910," which signals more long buyers in the market.

Scott Redler, chief strategic officer at

, who trades the

SPDR Gold Shares

(GLD) - Get Report

fund, was looking for a strong up move before getting positive on gold.

"Gold proved it can hold higher and broke above the established downtrend ... As long as GLD holds $131 moving forward it can start a new trend." Shares of the gold ETF were trading at $131.60.

Gold investors will have to keep one eye on Brussels where European Union leaders are meeting to discuss the current European Financial Stability Facility. Leaders are considering beefing up its reserves and the possibility of making it bigger and permanent starting in 2013.

Germany, the strongest EU nation, will push for stricter guidelines for how weaker countries can change their financial systems to fix their current debt issues a well as promote long-term fiscal health. The EFSF might also start buying bonds of troubled countries to control borrowing costs or lend money to the country directly so it can buy its own bonds.

In Egypt, rumors are flying that President Mubarak could step down immediately, but there has been no official announcement. Gold has responded dispassionately to violence and unrest in Egypt, but if a solution is found it would take any safe haven bid off the table for gold.

Silver prices

were still moving higher after the close up 37 cents to $29.10 while copper settled up 3 cents at $4.57.

Image placeholder title

Gold mining stocks

, a risky but profitable way to

buy gold

, were mixed.

Yamana Gold

(AUY) - Get Report

was up 0.25% at $11.88 while

Kinross Gold

(KGC) - Get Report

was losing 1.91% to $16.98.

Other large gold stocks


(AEM) - Get Report


New Gold

(NGD) - Get Report

were trading at $72.98 and $9.14, respectively. New Gold received an upgrade from BMO Capital to outperform from market perform.


Written by Alix Steel in New York.

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Alix Steel


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