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Gold falls to 4-month low, on track for worst week since 2013
[NEW YORK] Gold fell for the ninth straight session on Friday, briefly tapping a four-month low as computer-generated selling offset support from weak US payrolls data, but bullion was on track for its biggest weekly drop in more than three years.
A crash in the pound briefly sent gold priced in sterling to a three-month high.
Spot gold was down 0.09 per cent at US$1,252.71 an ounce by 3:11pm EDT (1911 GMT), after falling 1 per cent to US$1,241.20, the lowest since June 8. It was on track to close the week down 4.8 per cent, its biggest drop since June 2013.
US gold futures for December delivery settled down 0.1 per cent at US$1,251.90.
Spot gold's fall below the 200-day moving average on Thursday was "not a good sign," said Bill O'Neill, co-founder of Logic Advisors.
"There was a lot of algorithm and computer-generated trading, and that's really was caused all this," he said about the sudden drop to the session low.
Gold prices got an initial boost from news that US employment growth slowed for the third straight month in September and that the jobless rate rose.
The slowdown was not expected to prevent the Federal Reserve from raising interest rates later this year, though it curbed speculation about a move as early as next month.
The US dollar index is still expected to post its biggest weekly rise since June this week, based on Monday's upbeat US jobs and manufacturing report.
Gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion, while boosting the US dollar, in which it is priced.
"The majority of the move lower (occurred) on Tuesday ... following hawkish comments by Fed officials ... and a subsequent break of the psychologically and technically important US$1,300 level," Goldman Sachs said in a note.
"With prices having corrected sharply, we are broadly neutral on the outlook for gold through year-end, with our forecast of the probability of US rate hikes through year-end roughly in line with market expectations."
Outperforming spot, sterling-denominated gold was at 1,007.53 pounds an ounce, up 1.3 per cent, after surging 6.5 per cent to 1,059.06 pounds, its highest since mid-July.
The pound plunged to a 31-year low in a matter of minutes overnight in what traders said was a "flash crash". Spot platinum fell as much as 1.8 per cent to a six-month low at US$946.40 an ounce.
Silver was up 0.9 per cent at US$17.43, while palladium was 0.42 per cent lower at US$664.72.