Gold futures fell as investors reduced holdings of the precious metal amid signs that the US labor market continues to recover.
Gold for June delivery, the most active contract, fell $US12.30, or 0.9 per cent, to settle at $US1,293.60 a troy ounce on the Comex division of the New York Mercantile Exchange.
Prices have meandered in a $US60 range over the past two months, as brighter US economic data capped any rallies while a simmering conflict between Russia and Ukraine kept a floor under the market.
Gold is considered a haven from political instability, but the precious metal struggles to attract investors when the US economic outlook is improving.
On Thursday, US weekly jobless claims fell to the lowest level since May 2007 in a sign the labor market has stabilised.
The US dollar marched higher on the upbeat data, sapping foreign buyers' interest in gold.
Precious metals including gold and silver are priced in US dollars and a stronger US dollar makes them more expensive for foreign buyers.
"Better data is going to be supportive of the US dollar, and that's going to make it harder for gold to move higher," said Bill Baruch, a senior market strategist with iiTrader, a brokerage in Chicago.
Gold traders are also keeping an eye on Eastern Europe, where there is ongoing friction between Ukraine and Russia.
