Gold suffered its biggest drop in seven weeks after stronger-than-expected US jobs data sparked predictions that the Fed might soon begin to scale back its monetary stimulus.
Us job growth in July was the biggest in nearly a year, and the unemployment rate fell faster than expected. After the release of the report, the dollar rose and the yield on the 10-year Treasury note rose.
Gold fell as investors worried that an improvement in the US economy and rising inflation would prompt the central bank to withdraw unprecedented economic support. Low interest rates help make gold more competitive against interest-bearing assets. Gold prices are likely to suffer their biggest weekly decline since mid-June.
The jobs data "pushed gold prices down sharply as traders thought the Fed would not maintain its current monetary position," said Naeem Aslam, chief market analyst at Ava Trade.
Spot gold fell 1.9% at one point to $1770.99 an ounce at 09:09 New York time. The price of gold has fallen 2.3 per cent this week. The Bloomberg dollar spot exchange rate index rose 0.3%. Silver and platinum fell, while palladium was almost flat.