Spot gold moved lower to trade at $1,464.76 an ounce by 1318 GMT, down 0.1 per cent, reversing a 1.5-per cent gain to a two-week high of $1,487.80 earlier.
US gold for June delivery also fell 0.4 per cent to $1,460.10 an ounce.
“Gold reversed initial gains as we have a combination of stronger dollar and better sentiment towards the economy after the jobs data,” Commerzbank analyst Eugen Weinberg said.
“But prices are still holding up well as there are still elements providing support, such as the strong physical demand and the implication of the ECB rate cut.”
The dollar erased initial gains and rose against a basket of currencies after April payrolls pushed the unemployment rate to a four-year low of 7.5 per cent.
Employment data in Europe and the United States are likely to be closely scrutinised in coming weeks for more clues on the longer-term prospects for the Fed’s monetary stimulus.
“There will be a lot of focus on macroeconomic data in the coming weeks and months, especially on employment, indicators of price pressures and the impact of fiscal policy on growth,” UBS analyst Joni Teves said in a note.
Sentiment had improved after a cut in interest rates by the European Central Bank and the US Federal Reserve’s decision to stick to its stimulus programme.
The ECB cut its main interest rate by 25 basis points to a record low of 0.50 per cent on Thursday, its first change for 10 months, after inflation fell well below the bank’s target and weak economic surveys increased doubts about a recovery.
The decision came a day after the US Fed’s recommitment to its aggressive stimulus programme, and a month after the Bank of Japan stunned markets by promising to inject about $1.4 trillion into its economy to spur growth.
Easy monetary policy extended gold’s bull run to a 12th consecutive year last year, as investors bought bullion to hedge against inflation and economic uncertainties.
But inflation readings were lower recently and are not likely to show changes in coming months, analysts said.
“The fact that there is no such thing as hyperinflation scenario for at least the western countries and is more or less on people’s radar even though we have quantitative easing policies and that’s why we think gold will suffer in the medium term,” Danske Bank’s Christin Tuxen said.
ETFs HOLDINGS KEEP FALLING
Prices plunged to $1,321.35 on April 16, their lowest in more than two years, after a drop below $1,500 led to a sell-off that stunned investors and prompted them to slash holdings of exchange-traded funds.