Gold prices beat a fast retreat on Friday after above-forecast U.S. payrolls data that could potentially see the Federal Reserve keeping interest rates high for longer than expected.

Spot gold lost nearly 2% to $2,011.19 per ounce by 8:55 a.m. EDT (1255 GMT), but was up about 1% for the week after surging to $2,072.19 on Thursday, just shy of a record high of $2,072.49 after the Federal Reserve hinted that its marathon hiking cycle may be ending.

U.S. gold futures shed 1.8% to $2,018.70.

But a chunk of those gains were quickly unwound as U.S. employers boosted hiring in April while raising wages for workers, pointing to sustained labor market strength that could see the Fed keeping rates higher for some time.

“The data will not lead the Fed to hike rates in June, but it will likely remind the rate-cut fanciers to settle a bit,” said Tai Wong, an independent metals trader based in New York, “Gold’s had a good week and a hold above $2,000 will prevent technical damage and will still print a weekly high close above 2008,” Wong added.

Economic uncertainty and lower rates boost demand for zero-yielding gold.

Also on the radar, were developments surrounding the U.S. banking sector and the U.S. debt ceiling.

US hiring shows surprise surge as unemployment falls

“If we see further panic around the debt ceiling or U.S. banks, hold onto your hats as I fear price action could get nasty around these highs and punish bulls and bears,” said Matt Simpson, senior market analyst at City Index, warning that in “times of severe stress all markets, including gold, can fall.”

Meanwhile, global gold demand fell in the first three months of 2023, the World Gold Council (WGC) said on Friday.

Spot silver lost 1.9% to $25.57 per ounce, platinum was mostly unchanged at $1,039.50, while palladium gained 0.6% to $1,456.28.