Gold fell for a third session on Monday on fears the US Federal Reserve could soon begin tapering its bond-buying stimulus after a stronger-than-expected jobs report, and as the dollar hit a three-year high.
Bullion, typically seen as a hedge against inflation, has fallen 10 percent since Fed Chairman Ben Bernanke said last month the US economy was recovering strongly enough to reduce its $85 billion monthly bond buying stimulus later this year.
US employers added 195,000 new jobs to their payrolls last month, exceeding expectations of 165,000 and supporting the case for a Fed pullback.
"The jobs report is pulling gold prices down," said Peter Fung, head of dealing at Hong Kong's Wing Fung Precious Metals.
"Some physical buying interest supported prices earlier but we could test $1,200 again today (Monday)."
Gold for immediate delivery fell 0.2% to $1,220.59 an ounce by 0632 GMT following a 2% decline on Friday. Comex gold was higher by about $8 at $1,220.20.
Spot gold is expected to revisit its June 28 low of $1,180.71 per ounce as it may have resumed its primary downtrend, Reuters technical analyst Wang Tao said.
The US dollar rose 1.5% and hit a fresh three-year high against a basket of major currencies in Asia on Monday.
Gold posted its biggest quarterly loss on record, down 23% for April-June, and fell below $1,200 for the first time in nearly three years after Bernanke's comments on tapering.
Liquidations from gold-backed exchange-traded funds continued, signalling waning interest in the metal. SPDR Gold Trust, the world's largest gold ETF, said its holdings fell to a four-year low of 961.99 tonnes on Friday.
"We're predicting gold will continue to drop year after year roughly by $100 on average each year," Michael Haigh, managing director at Societe Generale, told reporters at a briefing in Singapore.
Haigh sees gold prices hovering around $1,200 towards the end of the year and fall further to average at $1,150 in 2014.
He also said as prices fall below $1,200, some gold miners will start hedging, adding to the bearish momentum.