Gold fell on Friday as a dollar-driven rally encouraged by U.S. economic growth dimmed bullion's investment appeal, sending the metal's prices toward a key support level at $1,200 an ounce.
Spot gold was down 0.6 percent at $1,215 an ounce. The metal fell to a nine-month low of $1,206.85 on Thursday, before rebounding due to a sharp selloff in U.S. equities, which prompted investors to seek refuge in perceived safer assets such as bullion.
U.S. gold futures for December delivery settled down $6.50 at $1,215.40 an ounce.
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"Today we are seeing the dollar and stock markets pressuring precious metals," MKS SA senior vice president Bernard Sin said.
"The market is getting a little bit nervous because we are floating just above this psychological level of $1,200 and it is important that we don't close below it today because a lot of stop losses would be triggered there."
Chart: Precious Metals
European shares rebounded from a one-month low hit earlier on Friday, while U.S. stocks rose as data showed the country's economy grew at its fastest pace in more than two years in the second quarter.
The Commerce Department raised its estimate of gross domestic product to show the economy expanded at a 4.6 percent annual rate, in line with expectations and the best performance since the fourth quarter of 2011.
Strong data lifted the dollar against a basket of major currencies, putting the U.S. unit on track for an 11th week of gains.
"Gold could fall below $1,200, but I maintain a cautious optimism that it won't break below the $1,180 area," Saxo Bank manager Ole Hansen said.
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"The dollar has been strengthening on the weak economic outlook for Europe and relatively hawkish expectations for interest rates in the U.S., and in that sense the jobs report next week is really important."
The bigger impact on gold prices could still come from economic data, with U.S. September nonfarm payrolls figures due on Oct. 3. Markets are eyeing more U.S. releases to gauge the strength of the economy and its impact on Federal Reserve policy.