"The position expressed by President Trump while campaigning needs to be more cautious," Assistant Secretary General for Palestinian Affairs Said Abu Ali told reporters in Cairo.
Departing from Washington's long-standing position, Trump promised to recognise Jerusalem as Israel's capital and relocate the American mission there, a vow that drew a fierce rebuke from Palestinian officials and concern from the European Union.
The city's status is one of the thorniest issues of the decades-long Israeli-Palestinian conflict.
"We look to the new US administration to reconsider its position so it can better act as an objective sponsor of the peace process," Abu Ali said.
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Earlier today, Israeli Prime Minister Benjamin Netanyahu urged Trump to keep his campaign pledge.
"Jerusalem is Israel's capital and it would be good if the American embassy wasn't the only one to move here... I think that with time the majority of embassies will move to Jerusalem," he was quoted as saying by his office.
"Transferring the American embassy to Jerusalem would be aggression against the rights of the Palestinian people in their eternal capital east Jerusalem," Abu Ali said.
He said it would violate UN Security Council resolutions and be "a retreat from the historical American position" on the city's status.
Two days after Trump's inauguration, the White House appeared to play down suggestions that such a move was imminent, however.
"We are at the very beginning stages of even discussing this subject," press secretary Sean Spicer told AFP.
Trump has said "there's nobody more pro-Israeli than I am", and Friedman has said he looks forward to working from "Israel's eternal capital, Jerusalem".