Gold ends lower after strong U.S. jobs report

Gold futures settled sharply lower on Friday as investors weighed the likelihood that upbeat U.S. economic data may give the Federal Reserve a reason to raise interest rates.

A closely watched jobs report showed that the U.S. added more jobs than economists forecast in March and the Institute for Supply Management said economic activity at U.S. manufacturing companies expanded for the first time in six months.

June gold GCM6, -0.38%  dropped $12.10, or 1%, to settle at $1,223.50 an ounce, after trading as low as $1,210.30. Prices on Thursday ended the first quarter up 16.4%—the best gain in a calendar quarter since 1986.

Signs of economic strength could push the U.S. central bank to lift interest rates sooner than expected. The prospect of higher rates is bullish for the dollar DXY, +0.05%  but weighs on assets priced in the currency, like gold. Higher rates also make holding gold, which doesn’t offer a yield, less attractive relative to other yield-bearing assets.

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