Gold settled nearly 2 percent lower on Friday, enduring its biggest one-day fall in more than a month, as surprisingly strong U.S. jobs data raised the prospect that the Federal Reserve may soon decide to temper its bond-buying stimulus.
A flurry of sell orders in heavy volume sent U.S. gold futures over $10 lower just minutes after the October nonfarm payroll data, setting a weaker tone for the rest of the day. A similar move in gold futures was also seen after Thursday's strong GDP report.
Rallying U.S. equities and a soaring U.S. dollar sent gold to a three-week low, as bullion underperformed silver and platinum group metals.
U.S. job growth unexpectedly accelerated in October, with employers adding 204,000 new jobs, and 60,000 more jobs were created in September and August than previously reported, the Labor Department said.
"Those payroll numbers made the folks who buy gold nervous as they did not go in the direction they wanted to see, suggesting that tapering could be back on the table,'' said Axel Merk, chief investment officer at California-based Merk Funds, which have $450 million assets under management.
Spot gold was last down 1.8 percent to $1,284 an ounce. The metal fell 2.3 percent for the week, its second consecutive weekly loss. U.S. gold futures for December delivery settled 1.8 percent lower at $1,284.60 an ounce.
Gold has lost about a fifth of its value this year due to fears the Fed would begin cutting back its $85 billion monthly bond purchases. The metal's inflation-hedge appeal has been burnished by the bond purchases and low interest rates.
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