By Maytaal Angel
LONDON (Reuters) - Gold steadied on Friday as traders weighed a weaker dollar versus steadier equities, though the precious metal was on course for slight gains for the week as the dollar rally looks to be losing steam amid escalating U.S.-Sino trade tensions.
The dollar fell after data showed the U.S. economy created more jobs than expected in June, but a closely-watched inflation gauge -- wage growth -- rose less than forecast, while the unemployment rate increased.
A weak dollar tends to lift gold because it makes the greenback-priced metal cheaper for non-U.S. investors.
U.S. tariffs on $34 billion worth of Chinese goods took effect on Friday, while China's commerce ministry said it had been forced to retaliate, meaning $34 billion worth of imported U.S. goods also face 25 percent tariffs.
The imposition of the tariffs was absorbed calmly by markets, with stocks edging higher. Rising stock markets, seen as risky assets, tend to weigh on gold, seen as a safe haven asset in times of economic or political upheaval.
"It's mainly the dollar that's supporting gold this week, the dollar has stopped going up," said Fawad Razaqzada, an analyst at FOREX.com. He added, however: "Global stocks are not exactly slumping, (possibly) because this (trade war has been) priced in."
Spot gold was 0.1 percent lower at $1,256.15 an ounce at 1329 GMT, having dropped to $1,252.15 earlier in the session.
It was, however, headed for its first weekly gain in four.
U.S. gold futures for August delivery slipped 0.1 percent to $1,257.10 an ounce.
Meanwhile, U.S. central bankers discussed whether recession lurked around the corner and expressed concerns global trade tensions could hit an economy that by most measures looked strong, minutes of the Federal Reserve's last policy meeting on June 12-13 released on Thursday showed.
"Traders are extremely cautious when it comes to gold. The intraday price-action has a bullish set-up and shows that the price has potential to test the level of $1,280 in the coming days if the dollar weakness continues," ThinkMarkets chief market analyst Naeem Aslam said.
India's gold imports fell for a sixth month in June to 44 tonnes as a drop in the rupee to record lows lifted local prices to a near 21-month high, curtailing demand, provisional industry data showed.
Gold-backed exchange-traded funds (ETFs) saw outflows in North America and Asia, but saw inflows in Europe during June as a strong U.S. dollar depressed gold prices, the World Gold Council said.
Silver edged up 0.1 percent at $16 an ounce.
Palladium slipped 0.4 percent to $944 an ounce, while platinum fell 0.6 percent to $836.50.
All three metals were headed for their fourth straight weekly decline.
(Additional reporting by Apeksha Nair and Karen Rodrigues in Bengaluru; Editing by Mark Potter and Louise Heavens)
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