BANGALORE: Gold has lost its year to date gains post Friday's blockbuster U.S. jobs data. The headline U.S. unemployment rate came in at 5.9percent - the last time the unemployment rate was below 6% was in July 2008.

The U.S. economy added 248,000 jobs in September, which marked the 48th straight month of job creation. This was sufficient news flow for traders to push back the price of the precious metal below $1,200/ounce as the probability of an earlier than expected rate hike by the Fed looks likely.

After tumbling by as much as 28% last year, if gold keeps inching downwards in the fourth quarter, it would be the first back to back year of losses since the great bull-run begun in 1998.

This column has been bearish on gold since price levels of around $1525/ounce when Ben Bernanke first announced the tapering of the Quantitative Easing (QE) program. The U.S. ten year yields climbed to 3% by 2013 end and gold accordingly corrected to levels of $1,200/ounce. This was due to the fact that the market was expecting higher real interest rates going forward.

As we have written before, the real interest rate captures the opportunity cost of holding gold relative to other risk-free assets which provide a return. Thus, historically, one of the most common reasons to have held gold was low real interest rates.