Gold futures in New York pared hefty gains and settled slightly lower on Friday, battered late by pre-weekend speculative selling, despite a softer dollar after a weaker-than-expected US jobs report.
Benchmark December delivery gold was down $1.00 at $656 an ounce at the close at the New York Mercantile Exchange's Comex division, after dealing from $655 to $666.
Dealers said gold spiked to a two-day high in trade after the US Labour Department said nonfarm payrolls rose just 113,000 in July and the jobless rate increased to 4.8 percent from 4.6 percent a month.
Economists polled by Reuters had expected a 142,000 rise in jobs. Traders initially bought gold because they saw the data as a sign that the US Federal Reserve may not raise interest rates next week at its August meeting.
Higher rates boost the greenback and pressure gold, which is often used as a dollar alternative. Those sentiments changed later in the session.
"The funds were selling at the end of the day. Gold's expensive here and I guess that's what the market is saying, even though it believes that the Federal Reserve is going to pause," said Leonard Kaplan, president of Prospector Asset Management.
After the data, the euro shot to a two-month high against the dollar at $1.2909 and was last quoted at $1.2888. "I just think that it's just amazing that gold closed lower.
It had that huge rally after the payrolls number, and then it kind of petered out all day," he said. Gold stayed supported, however, by the war between Israel and the Hizbollah, dealers said.
That offset some pressure from crude oil's fall after Tropical Storm Chris was downgraded to a depression, easing concerns it could inflict damage on oil and gas facilities in the US Gulf of Mexico.
Israeli air strikes killed at least 40 civilians in Lebanon and a Hizbollah rocket barrage into Israel killed three people as world powers tried to come to agreement on a resolution to stop the fighting.
In commodity news, electronic trading of financial, metals and agricultural futures at the Chicago Board of Trade was halted by technical problems on Friday, triggering shutdowns at exchanges in Kansas City, Minneapolis and Winnipeg, Canada.
Electronic trading at all the exchanges resumed at late morning, after about two-and-a-half hours, but the shutdown raised some questions about the CBOT's trading platforms.
The glitch came as CBOT gold volume so far this week had been surpassing that of the once-dominant Comex gold futures.
Spot gold edged down to $644.00/645.50 an ounce, from Thursday's late New York quote at $646.50/8.00. On Friday's afternoon fix in London hit $652.25.
The head of Anglo American Plc, the world's third-largest miner, said he was upbeat on the outlook for platinum, gold and other metals prices in the second half of this year.
"The outlook for gold in this changeable currency environment as a hedge against inflation also looks more positive than it has been for 10 or 15 years," Anglo Chief Executive Tony Tartar said on a conference call.
Comex September silver rallied 39.5 cents to $12.4850 an ounce, trading from $12.06 to a nine-week high at $12.65.
Spot silver rose to $12.31/12.41 from $12.04/14 previously. The fix was at $12.20.
Nymex October platinum rose $9.50 to end at $1,256 an ounce. Spot platinum was worth $1,242/1,246.
September palladium gained $2.85 to $327.50 an ounce. Spot palladium last traded at $322/327.
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