Gold prices edged lower on Friday as the dollar and Treasuries strengthened after data showed U.S. manufacturing output and services activity picked up, limiting demand for the yellow metal.
U.S. manufacturing output accelerated in November to its fastest pace in seven months and services activity also picked up more than expected, a survey of purchasing managers showed on Friday.
"Stronger data in the U.S. just strengthens the interpretation that the Federal Reserve is going to stay on the pause here, for the next few meetings," said Ryan McKay, a commodity strategist at TD Securities. "That means rates (Treasuries) and the dollar continue to move higher, which constrains gold."
The U.S. central bank, after cutting benchmark rates for the third time this year, had emphasized that it will keep interest rates on hold until the economy takes a downturn.
"Fear from the long drawn out trade war seems to be losing its sting as markets price in the possibility that no deal may be reached in the next few months," Silver Bullion sales manager Vincent Tie said. "I believe a greater catalyst to volatility in gold prices now are the actions of the Federal Reserve to expand their balance sheet once again."
The metal, considered as a safe asset during times of political and economic uncertainties, has jumped about 14% so far this year, which could be its best year in nine, mainly propelled by United States' trade war with China. U.S. President Donald Trump said that a trade deal with China is "potentially very close" and that he stands with both the people of Hong Kong, amid massive protests in the region, and Chinese President Xi Jinping.
The U.S. Congress on Wednesday passed two bills intended to support protesters in Hong Kong and send a warning to China about human rights, to China's displeasure.
"The markets are kind of pricing in just a further delay in trade (deal). The situation is so fluid, which is frustrating," said Edward Moya, a senior market analyst at OANDA.
Among other precious metals, silver slipped 0.4% to $17.02 per ounce, but was up for the week, while platinum fell 2.5% to $891.74. Palladium climbed 0.8% to $1,774.05 per ounce and with gains of more than 4% so far this week, the auto-catalyst metal was on track for its biggest weekly increase since mid-September.