NEW YORK ( TheStreet ) -- Profit- taking hit gold prices Friday as investors opted for stocks after a strong reading on U.S. jobs in March.

Gold for June delivery lost $11 to settle at $1,428.90 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,437.80 and as low as $1,413.50 while the spot gold price recovered some ground and was off $2, according to Kitco's gold index.

Silver prices closed shed 15 cents to $37.73 an ounce.



Both metals finished the first quarter with a bang, but were getting hit after a positive jobs report. Gold settled at a record $1,439.90 an ounce, but still has to take out the $1,450 level for prices to push higher. Silver prices closed at a 31-year record of $37.88 an ounce after surging 22% in the first quarter.

The Bureau of Labor Statistics said in its Employment Situation Report that nonfarm payrolls rose by 216,000 in March. That was well ahead of expectations. Economists were expecting the headline number to increase by 185,000, according to consensus estimates from Briefing.com.



Companies added 230,000 jobs, helping to offset the decline in state and local government payrolls. Economists forecast private payrolls to increase by 203,000, according to Briefing.com. The ADP survey released earlier this week said companies added 201,000 jobs in March.

The unemployment rate unexpectedly ticked down to 8.8%. It's now dropped for four straight months, with the household survey showing a more rapid increase in employment than the establishment survey.

In addition to investors ditching the safe haven for stocks after the good jobs number, investors might also be trading in gold for cash after the metal's 1.3% rally in the first quarter.

Gold was hit in January with this type of rebalancing, which is also sometimes referred to as window dressing. Both terms are used to describe when portfolio managers reshuffle assets in their portfolio from quarter to quarter. Gold rallied 2.7% in December but then shed 6.6% in January. A selloff in gold prices Friday and into next week might be part of the same trend.

The SPDR Gold Shares ( GLD) dumped 69.50 tons in the first quarter while iShares Gold Trust ( IAU) only added 7.61 tons. Since the gold price didn't sell off, it leaves physical buying and possibly hoarding to pick up the slack.

Gold prices have historically averaged a gain of 4.3% in the second quarter, according to Standard & Poor's, but Jon Nadler, senior analyst at Kitco.com, still sees the range for gold between $1,400 and $1,450 an ounce. Nadler doesn't see lots of new money in the gold market, so there is no oomph to push prices higher.

"The fact that after this horrific quarter gold is already not at $1,500, that's something to worry about," he said.

Other analysts don't expect today's selloff to last and are using it as a buying opportunity. David Banister, chief investment strategist at ActiveTradingPartners.com, is calling for $1,515-$1,550 gold in the next few months. "Sometimes these data points come out and there is a little bit of a knee-jerk reaction, but I believe eventually we will push right through."

The biggest wild card has been recent talk from Federal Reserve presidents about possibly raising rates to 1% before the end of 2011, and today's solid jobs data would support that rhetoric. But Banister believes that even if the Fed did raise rates, gold prices would still rally. Gold could pullback "a little further ... but real interest rates are still negative and that's always positive for gold."

Gold will look to strong physical demand from India and China to help support prices if investor demand slacks off. G20 leaders reportedly are considering including the yuan in the IMF's basket of currencies, which would put the yuan on the map as a leading global currency. Many experts speculate that China has been furiously buying gold in order to beef up the legitimacy of the yuan, not a gold standard but a gold helper.

"Private citizens have bought more gold in the last 30 months than the People's Bank of China owns altogether," says Adrian Ash, head of research for BullionVault.com. Currently,1.8% of China's central bank reserves are in gold.

There had been reports circulating on China TV that dealers were running out of coins and demand was soaring.

Nadler says he hasn't seen any concrete data to support the assertions.

"Clearly Chinese demand is not absent ... the question remains is are they more interested in paper speculation, will they take physical and who can afford to," he said. In Nadler's opinion, this surge in gold demand is an "urban yuppie phenomenon" and he doesn't see a mass stampede into gold.

The CPM Group's gold yearbook for 2011 says that gold consumption in China rose at an annual compounded growth rate of 7.5% from 2001 to 2010 and that fabrication demand, gold coins and bars, should rise to 14.3 million ounces in 2011, a 8.9% jump from 2010. Total gold demand in the country is expected to rise 16.6% in 2011.

India is also vying for the top spot, accounting for 32% of global demand in 2010, according to the World Gold Council, sponsor of the GLD. The WGC estimates that by 2020, cumulative annual demand for gold in India will increase to an excess of 1,200 tons.

Eurozone issues are also waiting in the wings as a catalyst for gold prices. Borrowing costs for Spain and Portugal are soaring, Ireland's debt rating was downgraded one notch by Standard & Poor's, Fitch is threatening to downgrade Ireland again, and Spain might have to provide guarantees to coerce big banks to buy smaller saving and loan banks.

Gold mining stocks, a risky but profitable way to buy gold, reversed earlier losses and were moving higher Friday. Yamana Gold ( AUY) was adding 1.62% to $12.51 while Harmony Gold ( HMY) was up 3% to $15.32.

Other gold stocks, New Gold ( NGD) and Gold Fields ( GFI) were trading at $11.80 and $17.67, respectively.


More on Gold
Gold Price News
How to Invest in Gold

-- Written by Alix Steel in New York.

>To contact the writer of this article, click here: Alix Steel.

>To follow the writer on Twitter, go to http://twitter.com/adsteel.

>To submit a news tip, send an email to: tips@thestreet.com.

RELATED STORIES:




Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.