Spot gold dipped 0.23 percent to $1,317.56 per ounce at 1:02 p.m. ET, having hit a nine-month peak of $1,326.30 on Thursday.
U.S. gold futures settled $3.10 lower at $1,322.10.
"The current dip is due to a combination of a very sturdy payrolls report, despite the U.S. government shutdown, as well as strong manufacturing data from the U.S., " said Tai Wong, head of base and precious metals derivatives trading at BMO.
"Gold has also had a great run this week, surging above $1,300, so there is a bit of profit-taking here."
The dollar briefly turned positive after data showed that hiring in the United States rose to an 11-month high in January, taking some shine off the metal, before the currency reversed course to trade down against a basket of currencies.
The overall outlook for gold remains positive, analysts said.
The metal has gained nearly 14 percent since hitting more than 1-1/2-year lows in August, mostly due to tumultuous stock markets and on expectations the Fed could pause its rate hike cycle.
"The Fed chairman's comments reaffirming that there would be no (immediate) rate hikes are going to keep gold up," said Miguel Perez-Santalla, vice president of Heraeus Metal Management in New York.
Fed Chairman Jerome Powell said on Wednesday the case for rate increases had "weakened," with neither rising inflation or financial stability considered a risk, and "cross-currents" including slowing growth overseas and the self-inflicted wound of a government shutdown making the U.S. outlook less certain.
Powell added that the central bank may end up with a larger balance sheet than anticipated.
"Also, people are waiting to see what happens with the (U.S.-China) trade negotiations, and because of that, they're still holding gold and building positions," Perez-Santalla said.
Despite comments from U.S. President Donald Trump that he would soon meet Chinese President Xi Jinping to seal a trade deal, Washington reiterated its March 1 "hard deadline" for an agreement to avoid implementing higher tariffs on a host of Chinese goods.
Disappointing factory activity data across much of the globe also has fueled concerns about a slowing economy.
"Market expectations over the Fed taking a break on rate hikes and persistent concerns over slowing global growth are themes that will ensure gold remains in fashion," Lukman Otunuga, research analyst at FXTM, said in a note.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, hit their highest level since June on Tuesday and have remained there since.
Elsewhere, palladium rose 0.48 percent to $1,349.50 an ounce, while platinum rose about 0.37 percent to $822.50.
Silver fell 1.03 percent to $15.90, having hit its highest since July 2018 at $16.19, previous session.