Gold settled 3.1 percent lower on Friday at $1,212 after positive U.S. jobs data sent the dollar rallying and rekindled worries the Federal Reserve could be tempted to scale back its monetary stimulus later this year.
The U.S. non-farm payrolls report for June showed employers added 195,000 new jobs last month, exceeding expectations of 165,000. The unemployment rate held steady at 7.6 percent.
The better-than-expected job numbers are among data that could steer the Fed toward a shorter timetable for its $85 billion in monthly bond purchases, analysts said.
Concerns about when the U.S. central bank could begin paring its stimulus has triggered turbulence across major asset classes worldwide. That has prompted Fed officials to back-pedal on Chairman Ben Bernanke's recent suggestion that the retreat could occur between later this year and next.
"The jobs numbers we got today simply reinforce the market's forward-looking position on where gold is likely to be down the road," said Frank McGhee, head precious metals trader at Integrated Brokerage Services in Chicago.
"The market is looking 6 to 8 months out, pricing gold in a rising interest rates environment."
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Spot gold price of bullion dropped by as much as 3.3 percent to a session low of $1,207.50 an ounce and later inched up to $1,215, still down nearly 3 percent and set for a third consecutive week of losses.
U.S. gold futures for August settled $39.20 lower at 1,212.70 an ounce.
Gold posted its biggest quarterly loss on record, down 23 percent for April-June and hit a near 3-year low of $1,180.71 last week, on selling exacerbated by Bernanke' comments that the economy was recovering strongly enough for the Fed to begin tapering in the next few months.
Such a retreat would support a rise in interest rates, making gold less attractive as a buy-and-hold asset.