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By Bloomberg

Gold declined for the third time in four days after investors sold the most from bullion-backed funds in seven months.

Holdings in exchange-traded products dropped 10.1 metric tons, the most since Oct. 8, according to data compiled by Bloomberg as of Friday. Assets now total 1,615.1 tons, the least since mid-January.

Investors have sold the metal amid speculation a strengthening economy will prompt the Federal Reserve to raise interest rates this year. U.S. payroll data released Friday showed job growth improved in April to come in just below economists’ estimates, while the unemployment rate declined. Higher borrowing costs curb gold’s appeal because the metal generally offers returns only through price gains.

“U.S. non-farm payroll data shows unemployment conditions are moving closer to what the Fed considers to be full employment,” Jonathan Butler, a precious metals strategist at Mitsubishi Corp. in London, said by e-mail. “This raises the prospect of wage inflation and leaves open the possibility of a hike in U.S. interest rates in September or October this year.”

Gold for immediate delivery lost 0.3 percent to $1,185.01 an ounce by 9:44 a.m. in London, according to Bloomberg generic pricing. Gold for June delivery fell 0.4 percent to $1,183.90 on the Comex in New York, with trading volume 32 percent below the 100-day average for the time of day.

The 223,000 increase in U.S. payrolls last month followed a revised 85,000 gain in March that was the smallest since June 2012, Labor Department figures showed Friday. The jobless rate fell to 5.4 percent, the lowest since May 2008.

A stronger dollar can also reduce demand for gold as a store of value. The greenback rose a third day versus the euro before European finance ministers meet on Monday to discuss the financial aid that Greece needs to stave off a default.

Silver for immediate delivery declined 0.2 percent to $16.4305 an ounce. Platinum retreated 0.5 percent to $1,135.86 an ounce. Palladium slipped 0.9 percent to $792.51 an ounce, after reaching an eight-week high of $803.61 on Friday.