Gold sags to 5-1/2-year low, heads for worst week since Oct

Gold slid more than 1 percent to its lowest since 2010 on Friday, on course for its biggest weekly loss in nine months, as strong U.S. jobs data helped deepen this week's rout and fueled fears the metal has some way to fall yet.

A breach of key support levels pushed more sellers to cut their exposure and market players warned that gold prices could fall further before seeing any convincing recovery.

Bullion tumbled 3.3 percent on Monday, the biggest drop since September 2013, in a sell-off accompanied by big trading volume in New York and Shanghai. Friday's drop to session lows also saw sizable volume on those exchanges.

Spot gold fell as much as 1.2 percent to 1,077 an ounce, its lowest since February 2010. It was down 0.6 percent at $1,084 at 0322 GMT.

The metal has lost more than 4 percent this week, its steepest weekly drop since October last year.

"I think there's still a bit of a hangover from what occurred earlier in the week," said Victor Thianpiriya, a commodity strategist at ANZ Bank in Singapore.

"The technical picture looks pretty bad and U.S. data has been stronger than expected. I don't expect to see any meaningful bounce until we get to around $1,040 and I think some of these sellers know that."

U.S. gold for August delivery fell 1 percent to $1,083.60 an ounce after hitting a trough of $1,072.30, its cheapest since October 2009.

As the selling pressure intensifies, traders from Hong Kong to New York are pointing the finger at others for being behind Monday's rout, while struggling to unmask the mystery sellers.

The number of Americans filing new applications for unemployment benefits last week dropped to its lowest level since November 1973, putting the Fed on course for its first interest rate rise in nearly a decade.

Most analysts are looking for the Fed to raise rates by September, suggesting more risk for non-interest-bearing gold.

As gold prices slump, holdings of SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, fell for the sixth day on Thursday to 22.01 million ounces, the lowest since August 2008.

Macquarie said it had cut its gold price forecasts by 7-15 percent from this year through 2019, citing shaken investor confidence in bullion. The investment bank cut its 2015 estimate to $1,152 from $1,249.