Gold prices drifted lower on Friday as traders switched over to riskier assets amid optimism that the upcoming U.S.-China trade talks next week will help ease trade concerns.
An encouraging report on services sector activity in China and upbeat U.S. jobs data drove stock prices up north and contributed to the yellow metal's decline.
Meanwhile, the Federal Reserve Chairman Jerome Powell noted the central bank "will be patient" with monetary policy as it watches the economy evolve. Following Powell's dovish remarks, the dollar pared earlier gains and slipped into negative territory.
Gold futures for February ended down $9.00, or 0.7%, at $1,285.80 an ounce.
On Thursday, gold futures ended up $10.70, or 0.8%, at $1,294.80 an ounce, the highest settlement since mid June 2018. For the week, gold futures gained about 0.2%.
Silver futures for March ended at $15.786 an ounce, down $0.011 from previous close. Copper futures for March settled at $2.647 per pound, gaining $0.079 for the session.
China's commerce ministry said that China and the United States would hold vice ministerial level trade talks in Beijing on January 7-8 in a bid to defuse trade tensions.
Data released by Markit said growth in China's services sector edged higher in December. The Caixin/Markit services PMI rose to a six-month high of 53.9 in December from 53.8 in November.
The Labor Department's report showed a much stronger than expected job growth in the U.S. in the month of December. The report said non-farm payroll employment soared by 312,000 jobs in December after climbing by an upwardly revised 176,000 jobs in November.
Economists had expected employment to increase by about 177,000 jobs compared to the addition of 155,000 jobs originally reported for the previous month.
Despite the much stronger than expected job growth, the report said the unemployment rate rose to 3.9% in December from 3.7% in November. The unemployment rate had been expected to come in unchanged.
However, the unexpected uptick by the unemployment rate came as the labor force jumped by 419,000 people compared to a much more modest 142,000-person increase in the household survey measure of employment.
Meanwhile, the Federal Reserve Chairman Jerome Powell noted the central bank "will be patient" with monetary policy as it watches the economy evolve. Powell stressed that monetary policy is not on a "preset path" after the Fed raised interest rates four times in 2018 and forecast two rate hikes in the new year.
"Particularly with muted inflation readings that we've seen coming in, we will be patient as we watch to see how the economy evolves," Powell said.
The Fed chief said the central bank is always prepared to significantly shift the stance of monetary policy if incoming economic data does not meet expectations.
Powell's comments came as part of a joint discussion with former Fed Chairs Janet Yellen and Ben Bernanke at the American Economic Association and Allied Social Science Association annual meeting in Atlanta.
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