Gold fell to a three-month low on Friday and was set to post its biggest weekly drop in more than two years after U.S. data showed job growth surged in October, making it likely the Federal Reserve will hike interest rates in December.
U.S. job growth surged in October and the unemployment rate hit a 7-1/2-year low of 5.0 percent in a show of economic strength, sending the dollar up 1.4 percent to the highest since April.
"The powerhouse payrolls report battered gold beneath $1,100 for the first time since August," said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.
"Gold is now down eight days in a row but will remain under pressure as the market's view of the chances of December rate hike soars."
, stronger initially, fell as much as 1.7 percent to $1,084.90 an ounce, its lowest since Aug. 7. It was down 1.4 percent at $1,087.90.
The U.S. futures contract for December delivery settled down 1.5 percent at $1,087.70 an ounce. The contract's volume surged nearly 49,500 lots between in the half hour that followed the jobs report, the biggest 30-minute burst of volume for the most active contract in a year.
Spot gold was heading for a 4.6 percent decline for the week, the sharpest such slide since June 2013 and nearing July's 5-1/2-year low.
"With numbers like these, the Fed are almost duty bound to raise rates within this year," Mitsubishi precious metals analyst Jonathan Butler said.
"The dollar is approaching 3 month highs and U.S. treasury yields are the highest since July. Gold could retrace to the lows for the year," he added.
Fed Chair Janet Yellen said on Wednesday that a rise in rates in December was a "live possibility" if justified by upcoming economic data.
Non-interest-paying gold could see demand take a hit from higher rates.
Assets in SPDR Gold Trust, the top gold-backed exchange-traded fund, tumbled to 671.77 tons, the lowest since mid-August. On Thursday alone, the fund saw outflows of 8.34 tons, the biggest daily drop since July 17.
With an 8.7-percent slide, palladium was on track for its worst week since December 2011, hurt by sharp outflows from exchange-traded funds. Prices bounced on Friday, rising 2 percent to $615.97 an ounce.