Gold slipped on Friday and was heading for a weekly drop, as a stronger-than-expected U.S. jobs report reinforced expectations that the Federal Reserve would refrain from cutting interest rates at its December meeting.

Spot gold fell 0.9 percent to US$4,039.86 per ounce, as of 0643 GMT. Bullion has dipped 1 percent this week. U.S. gold futures for December delivery dipped 0.6 percent to US$4,035.60 per ounce.

"Gold prices are consolidating at the moment, and we see the dollar has strengthened quite a bit, and behind it, there is a lot of speculation whether the Fed will continue to cut interest rates or not," GoldSilver Central MD Brian Lan said.

"I think now the market is unsure, and especially, now, when we are going to the end of December, we expect a lot of traders will be taking profit off their positions, and that's what we saw at the end of last week to this week."

The dollar was on track on Friday for its strongest week in more than a month. A stronger dollar makes greenback-priced gold more expensive for holders of other currencies.

The closely watched U.S. Labor Department report, delayed by the federal government shutdown, showedthat September nonfarm payrolls increased by 119,000, more than double the estimated increase of 50,000.

Traders now see nearly a 39 percent chance for a Fed rate cut next month. Gold, a non-yielding asset, tends to do well in low-interest-rate environments.

Chicago Fed President Austan Goolsbee repeated on Thursday he is "uneasy" about frontloading rate cuts, particularly with progress on inflation towards the Fed's 2 percent goal looking to have stalled and starting to go the wrong way.

Meanwhile, physical gold demand across major Asian markets remained weak this week, as volatility in rates deterred potential buyers from making purchases.

Elsewhere, spot silver slipped 2.2 percent to US$49.48 per ounce, platinum fell 0.4 percent to US$1,505.96, and palladium dipped 1.4 percent to US$1,358.15.

REUTERS

Gold on track for weekly fall as strong US jobs data dents rate-cut hopes