Gold fell 3 percent on Friday, extending earlier losses as the dollar climbed after stronger-than-expected U.S. jobs data, which could tempt the Federal Reserve to start scaling back its monetary stimulus later this year.
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The U.S. non-farm payrolls report showed employers added 195,000 new jobs to their payrolls last month, while the unemployment rate held steady at 7.6 percent as more people entered the workforce. Economists had forecast new jobs of 165,000.
The data could affect the timing of the U.S. central bank's expected scaling down of its $85 billion monthly bond purchases, the prospects of which has already triggered turbulence across major asset classes worldwide.
Spot gold dropped by as much as 2.9 percent to a session low of $1,212.70 an ounce and was trading at $1,214.19 by 1353 GMT, still down 2.5 percent and set for a third consecutive week of losses.
U.S. gold futures for August fell $38.40 at $1,213.14.
"After the strong U.S. numbers we are approaching the point in which the Fed will start to taper and as a consequence we fully expect that, if the U.S. economy continues to improve, you will see a further strengthening of the dollar, which is negative for the dollar-denominated gold price," Natixis analyst Nic Brown said.
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Gold posted its biggest quarterly loss on record, down 23 percent in the April-June period, with selling exacerbated by comments from Fed Chairman Ben Bernanke last month that the U.S. economy was recovering strongly enough for the central bank to begin tapering in the next few months.
That would support a rise in interest rates, making gold less attractive.
The dollar rose to a three-year high against a basket of major currencies, while the benchmark 10-year U.S. Treasury yield rose to its highest level since August 2011 at 2.67 percent earlier.
As gold pays no interest, the rise in returns from U.S. bonds and other markets is seen as negative for the metal.
The metal, which staged a rebound from last Friday's near three-year low of $1,180.71 an ounce this week, had come under pressure after the European Central Bank signalled in the previous session that it could cut interest rates further, pressuring the euro against the dollar.
"The euro is likely to remain week, as the ECB will remain accommodative longer than the Fed... And when combined with relatively subdued inflation expectations on both sides of the Atlantic, this is gold bearish," VTB Capital said in a note.
Rapid outflows from gold exchange-traded products (ETPs) and softer-than-expected physical demand were also keeping gold prices under pressure.
Gold ETPs holdings fell by $4.1 billion in June and $28.2 billion year-to-date, according to data from BlackRock.
Indian consumption has fallen since the government imposed new import restrictions, while Chinese buyers are waiting on the sidelines for prices to fall further, or at least stabilise.
Silver fell 3.8 percent to $18.71 an ounce. Platinum was down 1.9 percent to $1,311.75 an ounce and palladium dropped 1.2 percent to $666.47 an ounce.