MANILA — Gold edged lower on Friday, but was not far from a 13-month peak reached in the previous session when a weaker dollar and technical buying gave bullion its best day in two weeks.

Investors are eyeing crucial US nonfarm payroll data due later in the day, where a strong reading for February could stall further gains in the precious metal, now up nearly 19% this year and among the top commodity performers.

Spot gold was down 0.3% at $1,259.50/oz by 2.10am GMT, after rallying nearly 2% on Thursday when it hit $1,267.06, its strongest since February 6, 2015. It has gained 3% for the week.

Gold’s modest retreat was expected after the sharp technical buying overnight, said Daniel Ang, investment analyst at Phillip Futures in Singapore. But the losses could deepen if the US employment data turns out strong, he said.

US nonfarm payrolls are estimated to have risen by 190,000 in February after increasing by 151,000 in January, according to a Reuters poll of economists.

A number above 200,000 could drag gold down to $1,240, said Mr Ang.

US gold for April delivery climbed 0.2% to $1,260.50/oz.

A "blockbuster" nonfarm payroll number was unlikely to have a major effect on the US Federal Reserve’s policy stance, Mizuho Bank wrote in a note, saying that the "gradual pace of tightening will be maintained in the context of China risks, global financial volatility and the knock-on impact on the US economy".

That should help noninterest-yielding gold keep or add to gains in the short term.

Also boding well for gold was data on Thursday that showed the US economy’s service sector expanded in February at a slightly slower pace than the previous month and employment declined for the first time in two years.

Dallas Federal Reserve president Robert Kaplan called on the US central bank to be patient when it came to raising interest rates, citing the effect of tighter financial conditions on US economic growth.

Spot silver slipped 0.3% to $15.19/oz, palladium dropped 1.2% to $533.55 and platinum fell 0.5% to $944.50.