Gold fell more than 1 percent on Friday after U.S. November non-farm payrolls data beat forecasts, fueling expectations that the Federal Reserve will raise interest rates sooner rather than later and lifting the dollar.
Labor Department data showed the U.S. economy added 321,000 new jobs last month, the largest number in nearly three years, and wages increased.
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That sparked a rally in the dollar, which hit its highest since mid 2007 against the yen, and prompted traders to bet the Fed will raise rates earlier in 2015 than formerly thought.
Spot gold was last down 1 percent at $1,194 an ounce, while U.S. gold futures for December delivery were down $13 an ounce at $1,195. In the wake of the data spot gold hit a low of $1,186.10, down 1.6 percent.
"It will be interesting to see how (gold) develops as we move towards the FOMC meeting on Dec 17," ABN Amro analyst Georgette Boele said. "It will be interesting to see what they do with this statement. If we have a more hawkish Fed, more of an adjustment in interest rate expectations, and a still higher dollar," it will be negative for gold.
Higher rates boost the opportunity cost of holding non-yielding gold and lift the dollar, in which the metal is priced.
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A surge in U.S. hiring in November lifted the dollar to a five-and-a-half year high against a basket of currencies on Friday, and stocks bounced as investors priced in a U.S. interest rate hike by mid-2015.
In the physical bullion markets, Chinese buying remained steady with premiums unchanged at about $1-$2 on Friday.
"Physical demand continues to underpin both the silver and gold markets," Kitco Metals Inc said in a note.
Data from the Istanbul Gold Exchange showed gold imports into Turkey more than doubled year on year to 46.9 tonnes in November, its strongest monthly imports in more than six years.