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Gold drops below $1,200 on strong payrolls

FXStreet (Córdoba) - Gold dropped below $1,200 an ounce for first time this year as the dollar strengthened sharply after data showed US economy added more jobs than expected last month and the unemployment rate fell below 6.0%.

US nonfarm payrolls showed economy created 248,000 in September versus an upwardly revised gain of 180,000 last month and beating expectations of 215,000. Meanwhile, the unemployment rate unexpectedly dropped to 5.9%, hitting its lowest level since July 2008.

The Federal Reserve is debating when to hike interest rates, and it is looking at jobs reports for evidence that the US economy can stand on its own. The central bank has said it could raise rates sooner than expected if labor market improves faster than projections.

Prospects of tightening monetary policy by the Fed have supported the dollar over the last months, putting the yellow metal under pressure and in a downward path ever since peaking at $1,392 an ounce in March.

Gold fell as low as $1,198.14 in recent dealings and it was last down 1.04% on the day at $1,201.65.

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