Gold fell 1.8 percent on Friday, dropping below $1,200 an ounce for the first time this year, as the dollar surged after strong US jobs data bolstered bets that the Federal Reserve will raise interest rates next year. Bullion has now dropped 11 percent from its July high at $1,345, entering into a correction, defined as a 10 percent drop from its most recent high. It is also within sight to a four-year bottom at below $1,180 an ounce.
Platinum dropped 3 percent and other precious metals and commodities also tumbled as the dollar index rallied to a four-year high. The S&P 500 equities index rose over 1 percent after the Labour Department said US hiring accelerated in September and the unemployment rate fell to a six-year low, underscoring strength in the labour market.
Market watchers said that a strengthening US outlook diminishes gold's safe-haven appeal in spite of uneven growth in Asia and Europe. "We have a global economy that is not going anywhere, but we do have a strong nonfarm payrolls report, and that appears to be enough to take down gold and discourage people from holding gold," said Axel Merk, chief investment officer at Merk Funds, which manages $400 million in assets in currency mutual funds and a gold ETF.
Spot gold fell as much as 2 percent to its lowest since December 31 at $1,189.64 an ounce, and was down 1.8 percent at $1,192.20 at 3:10 pm EDT (1910 GMT), its biggest one-day drop since July. US COMEX gold futures for December delivery settled down $22.20 at $1,192.90 in heavy turnover. Bullion's relative strength index is approaching its most oversold level since June 2013.
-- Platinum on Friday hit lowest since September 2009
The dollar rose 1.2 percent against a basket of currencies, on track for a 12th straight week of gains, a feat not seen in four decades. Fed policymakers will scrutinise the jobs data as they prepare for a policy meeting October 28-29, even though economists do not foresee an increase until around the middle of next year. Non interest-bearing assets such as bullion have benefited from the Fed keeping interest rates near zero since December 2008.
Meanwhile, platinum tumbled nearly 3 percent to its lowest since September 2009 at $1,216.40 an ounce. It was last down 3.2 percent at $1,219.90. Silver was down 1.5 percent at $16.80 an ounce after earlier touching its lowest level since March 2010 at $16.69. Palladium was down 1.5 percent at $753.20 an ounce.