Gold prices moved lower during Asian trading on Friday, giving back much of the previous session's gains as investors adopted a cautious approach ahead of the release of the closely watched United States nonfarm payrolls report.
By 4 pm AEST (6 am GMT), spot gold was down 0.8% at US$4,439.10 per ounce.
Market sentiment remained cautious amid ongoing uncertainty surrounding the conflict in the Middle East. Negotiations aimed at securing a peace agreement between the United States and Iran remained stalled, while fresh developments in Lebanon added to concerns about regional stability.
The Iran-backed militant group Hezbollah rejected a U.S.-brokered ceasefire proposal that had been agreed to by the Lebanese and Israeli governments, casting doubt on efforts to de-escalate tensions in the region.
The rejection followed comments from Israeli Defence Minister Israel Katz, who said Israeli forces would continue military operations in Lebanon despite the ceasefire arrangement.
The latest setbacks to diplomatic efforts offset more optimistic remarks from U.S. President Donald Trump, who has expressed confidence that progress is being made towards a broader peace agreement and the reopening of the Strait of Hormuz.
As a result, investors continued to favour defensive assets, supporting demand for both gold and the U.S. dollar.
However, the stronger greenback weighed on bullion prices during Friday's session, making the precious metal more expensive for holders of other currencies.
The U.S. dollar index has also found support from a series of resilient economic data releases, which have reinforced expectations that the Federal Reserve may maintain a cautious approach to monetary policy.
Recent labour market, inflation and economic activity figures have suggested the U.S. economy remains relatively stable despite heightened geopolitical uncertainty, reducing expectations for aggressive interest rate cuts in the near term.
Attention is now firmly focused on the May nonfarm payrolls report, which is expected to provide fresh insight into the strength of the U.S. labour market and influence expectations for Federal Reserve policy.
Markets are expecting the U.S. economy to have added 85,000 jobs in May, down from the 115,000 positions created in April.
The unemployment rate is expected to remain unchanged at 4.3%.
