Gold fell more than 1 percent on Friday, after US November non-farm payrolls data beat forecasts, fuelling expectations that the Federal Reserve will raise interest rates sooner rather than later and lifting the dollar. Labour Department data showed the US economy added 321,000 new jobs last month, the largest number in nearly three years, and wages increased.
That sparked a rally in the US dollar, which hit multi year highs and prompted traders to bet the Fed will raise rates earlier in 2015 than formerly thought. Spot gold was down 1.2 percent at $1,190.90 an ounce at 2:42 pm EST (1942 GMT), while US gold futures settled down $17.30 an ounce, or 1.4 percent, at $1,190.40. In the wake of the data, spot gold hit a low of $1,186.10, down 1.6 percent. Some traders said they were surprised it did not fall further.
For the week, however, spot gold rose around 2 percent after heavy short-covering lifted prices 4 percent on Monday, its biggest daily gain in more than a year. Traders said this could attract short-term buying next week, while others suggested the market was stabilizing around current levels.
"It will be interesting to see how (gold) develops as we move towards the FOMC meeting on December 17," ABN Amro analyst Georgette Boele said. "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. 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. Silver was down 0.9 percent at $16.26 an ounce. Spot platinum was down 0.9 percent at $1,218.42 an ounce, while palladium was up 0.7 percent at $799.91 an ounce.