Gold prices rose after some investors wagered that the tepid pace of U.S. hiring would discourage the Federal Reserve from raising interest rates until later this year.
Gold for June delivery, the most actively traded contract, increased $ 6.70, or 0.6%, on Friday to settle at $ 1,188.90 a troy ounce on the Comex division of the New York Mercantile Exchange.
Gold futures gained 1.2% for the week.
Investors have been scrutinizing U.S. data for clues as to when the Fed might lift borrowing costs from near zero. Mixed signals from economic reports have kept gold prices tethered to a narrow trading range in recent weeks. The precious metal doesn't pay interest or dividends and has a harder time competing with stocks and bonds when interest rates are climbing.
On Friday, the Labor Department said U.S. nonfarm payrolls rose a seasonally adjusted 223,000 jobs in April while the unemployment rate, collected through a separate survey, fell to 5.4%, from 5.5% in March. Economists had expected a gain of 228,000 jobs last month and an unemployment rate of 5.4%.
Gold prices jumped to $ 1,193 an ounce as traders zeroed in on steep revisions to March hiring, which was cut to 85,000 jobs from a previously reported 126,000.
"That back-month revision is horrible…[and] will be supportive for gold," said Bob Haberkorn, a senior commodities broker with RJO Futures in Chicago. "The March number was bad from the get-go, and then to be revised even lower. What's going to happen to us next month?"
The data suggest the Fed won't raise borrowing costs in June, delaying a monetary-policy shift that would push gold prices lower, Mr. Haberkorn said.
However, gold prices pulled back from the highs in afternoon trading as investors conceded that higher rates remain on the horizon.
"The market is anticipating that we will probably have higher rates if not this year, then in the first quarter of next year," said Bill O'Neill, co-founder of commodities investment company Logic Advisors.
Continued declines in the U.S. unemployment rate also should worry gold bugs, as they suggest the labor market is steadily improving, said Ira Epstein, a broker with Linn Group in Chicago.
He said Fed officials are likely to argue that the economy will grow if unemployment keeps shrinking, clearing the path for higher interest rates.
"We're debating when interest-rate increases will come; it does not take them off that table. And that means a strong dollar and weak gold," Mr. Epstein said.
Investors' jitters leading into Friday's jobs data were likely behind the drop in gold held by exchange-traded funds, said Standard Bank metals analyst Leon Westgate in a note to clients. Gold held by SPDR Gold Trust, the world's largest gold-backed ETF, fell to 739.07 metric tons at the close of business on Thursday, from 741.75 metric tons on May 1.
Still, the fund's gold hoard has increased 4.6% from the start of the year.
In other markets, the June palladium contract jumped 2.1% to $ 802.35 a troy ounce, the highest close since March 10. Palladium is widely used in exhaust filters for gasoline-burning vehicles, which dominate the U.S. auto market. Demand for the metal likely will get a boost from an economy that continues to expand.
Write to Tatyana Shumsky at tatyana.shumsky@wsj.com
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