Gold erased this year’s gains after U.S. employers added more jobs in September than forecast, stoking speculation that the Federal Reserve will move closer to raising interest rates.

Futures for December delivery fell as much as 1.4 percent to $1,198.40 an ounce in New York, the lowest since Dec. 31 and falling below $1,200 for the first time this year. A decline in 2014 would cap the first back-to-back annual losses for the metal since 1998. Prices tumbled 28 percent last year, the most in three decades.

An accelerating American economy means investors are shunning gold even after the U.S. expanded sanctions against Russia and ramped up its military campaign to combat Islamic State in Iraq. Rising interest rates reduce gold’s allure because the metal generally only offers investors returns through price gains, while a stronger dollar typically cuts demand for a store of value.

“Strengthening payrolls are going to add to the perception that the Fed is going to raise rates sooner,” Charlie Bilello, who helps oversee $220 million as director of research at Pension Partners LLC in New York. “The perception is that a more hawkish Fed is negative for gold.”

Gold futures for December delivery fell 1.1 percent to $1,201.40 an ounce at 9:02 a.m. on the Comex in New York. A close at that price would leave the metal down 0.1 percent this year.

The 248,000 gain in payrolls followed an 180,000 August increase that was bigger than previously estimated, the Labor Department said. The median forecast of economists in a Bloomberg survey called for a 215,000 advance. The unemployment rate fell to the lowest level since July 2008.

Goldman View

Goldman Sachs Group Inc. said Thursday that a stronger U.S. economy is “driving” a bearish gold outlook, maintaining a forecast for prices to reach $1,050 in 12 months.

More than $3.4 billion has been erased from the value of exchange-traded products backed by gold this year, and money managers are holding their smallest bullish bet since January.

“The key driver has been the more likely tightening of U.S. monetary policy, which has been reflected in the stronger dollar,” Robin Bhar, an analyst at Societe Generale SA in London, said Thursday. “Gold doesn’t earn any yield or return. Investors are becoming more disillusioned when it comes to gold.”

Assets in gold-backed ETPs reached the lowest since 2009 Thursday, data compiled by Bloomberg show. Inflation expectations, measured by the five-year Treasury break-even rate, are near the lowest since June 2013.