The price of August gold fell by as much as $38 an ounce or more than 2.5% to touch $1,377.50 an ounce on Friday after data showed better than expected payroll numbers in the US.
The metal has been trading in a range either side of the psychologically $1,400 an ounce level for the past few weeks, but now seems to have made a decided break to the downside.
By lunchtime gold was trading near the bottom of the day's range at $1,381 an ounce, a two-week low.
While the unemployment rate rose slightly to 7.6%, the better-than-expected jobs numbers was good news for the dollar and at the same may mean that the Federal Reserve will start tapering off its QE program to keep interest rates low and flood markets with cheap money sooner rather than later.
The Fed's open ended assets purchases at a clip of $85 billion a month hurts the US currency, but a stronger dollar diminishes gold's allure as an inflation hedge and storer of wealth.
Investors are also dumping gold in favour of riskier assets such as stocks – the Dow Jones rose sharply back above the 15,000 level on the employment news.
Gold is also losing relative to other commodities with crude oil poised for one of its best trading weeks this year after scaling $96 a barrel, a 4% gain since Monday.