London: Gold prices fell towards a second weekly loss on Friday after US payrolls data failed to allay uncertainty over the prospect of a near-term interest rate hike from the Federal Reserve.

Data from the Labor Department on Friday showed that nonfarm payrolls rose 173,000 last month, a slowdown from July’s upwardly revised gain of 245,000.

However, a drop in the unemployment rate to a near 7-1/2-year low and an acceleration in wages kept alive prospects of a Federal Reserve interest rate increase later this month.

Spot gold was down 0.4 per cent at $1,120.80 an ounce at 1346 GMT, while US gold futures for December delivery were down $4.70 at $1,119.80. The metal is on track to fall for a second week.

“Overall I think the payrolls were erring on the better side, even though the headline number was weaker, because of the lower unemployment rate, the higher hourly earnings, and the upward revisions,” ABN Amro analyst Georgette Boele said.

“The dollar is also doing relatively OK, which is not so good for precious metals.” A top Federal Reserve policymaker said the data on the US

jobs market was “good” and did not change the outlook for monetary policy.

US stock futures fell and the dollar was little changed against a currency basket after the data.

Gold has come under pressure this year from expectations the Fed will hike rates for the first time in nearly a decade. The metal has benefited from ultra-low interest rates, which cut the opportunity cost of holding bullion while pressuring the dollar.

The Fed has already indicated that the timing of a hike is largely data-dependent.

The absence of Chinese buyers also weighed on gold, with markets in the major bullion consumer closed this week for public holidays.

Gold prices in India swung to a discount to the global benchmark this week for the first time since mid July as a weak monsoon dampened demand in another of the world’s biggest consumers.

“Although August bullion imports were high, demand in India appears to have stalled,” HSBC said in a note. “China’s markets are closed for the rest of the week ... Without two key physical markets it will be tough for gold to rally.” Other data showed sales of gold coins and minted bars at the Perth Mint dipped in August from a nine-month high in the previous month.

Among other precious metals, silver was down 1.4 per cent at $14.56 an ounce. Platinum was down 0.4 per cent at $997.50 an ounce, while palladium was up 0.4 per cent at $575.22 an ounce.