Gold was heading for a third straight annual decline - its longest slump since 1998, as dollar strengthening and the likely interest rate hike by the Federal Reserve weighed on the metal.
Prices fell to the lowest in five years on speculation that US policy makers will raise interest rates next month, which was pencilled in as a certainty by many after the latest strong non-farm jobs number.
Gold has been hit by the rise in the US currency, which curbs the metal’s appeal as an alternative asset.
The likelihood that the Federal Reserve will increase rates for the first time since 2006 climbed to 72% by the end of November, from just 35% a month ago.
That figures though were before the jobs report for November, which showed 211,000 new jobs were created in November and the unemployment rate was steady at 5%.
The Bloomberg Commodity Index said: “Bets on higher rates have risen as a resilient US labor market powers consumer spending, adding to signs that the economy may be robust enough to withstand higher rates.”
Speculators remain bearish on the price, adding to their net-short positions.
By November 24, Bloomberg said the level of net-shorts in gold futures had reached its highest since the US government data started to be recorded in 2006.
But they are not the only bears in the market, with investors in gold exchange-traded products cutting their holdings for an eighth consecutive session on Monday, to the lowest level since 2009.
“Almost US$10bn has been wiped from the value of gold ETPs this year,” the Bloomberg Commodity Index said.
On the supply side, half of the gold being mined globally may not be profitable at current prices.
But it may not be all bad, as the lower prices may start to attract jewellery and coin buyers, especially in Asia, the Index said.
In China, gold demand may match or exceed the record in 2013 as consumers seek protection against financial-market turmoil and the yuan devaluation, according to the Chinese Gold & Silver Exchange Society.
Meanwhile, in India, imports tripled to 152.9 tons in August, the Directorate General of Commercial Intelligence and Statistics said.
But analyst ABN Amro remains bearish on the metal going forward.
It believes the market is not yet pricing any further monetary tightening, even a slow pace.
“We expect investors to continue to liquidate positions in the months ahead because of a higher US dollar and US rates.”
“It is likely that new lows in prices will be reached before the end of the first quarter of 2016,” it added.
Amro reckons gold will break below US$1,000 before the end of the first quarter next year, before being pushed down to as low as US$900 or below later in the year.
Gold was trading US$24 higher on Friday at US$1,085, ending the week up US$16, or 1.8%.