Spot gold, 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.
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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.
Silver dropped 1.5 percent to $14.74 an ounce and platinum was down 1.1 percent at $935.25 an ounce. Both metals were headed for their third straight weekly decline.