GOLD HITS FIVE-AND-A-HALF-YEAR LOW /

london — Gold slid more than one per cent on Friday to its lowest since early 2010 as fresh strength in the dollar prompted another wave of selling, putting the metal on course for its biggest weekly loss in nine months.

Prices have been under pressure since tumbling more than three per cent in Asian trading hours on Monday, their biggest one-day drop in nearly two years, in a selloff accompanied by heavy trading volumes in New York and Shanghai.

Spot gold hit a low of $1,077.00 an ounce on Friday and was down 1.1 per cent at $1,079.20 at 1216 GMT. US gold futures for August delivery were down $15.90 an ounce at $1,078.20. Gold has been hurt this year by expectations that the Federal Reserve is on track to raise interest rates for the first time in nearly a decade, boosting the opportunity cost of holding non-yielding bullion while lifting the dollar.

“It feels as though the driver in this market, aside from the impetus we got from China, is that if you get any kind of dollar strength, gold goes down,” Natixis analyst Nic Brown said. “But the flip side of that simply doesn’t support prices.”

“It’s been very painful this week,” he said. “Sentiment remains negative, and the trend does very much appear to be further down.”

The dollar rose on Friday after data the previous day showed US weekly jobless claims dropping to their lowest since 1973, while the euro fell on downbeat German and eurozone data.

As gold prices slump, holdings of the world’s biggest gold-backed exchange-traded fund (ETF), the SPDR Gold Trust, fell for a sixth day on Thursday to 684.6 tonnes, the lowest since September 2008.