(Kitco News) - A stronger-than-expected U.S. employment report caused gold to break below a key support level, ending the week at its lowest point since Jan. 12.

Friday, the Bureau of Labor Statistics said 257,000 jobs were created in January, beating expectations of 236,000 jobs. The data also reported strong revisions for December and November and said that wages increased 0.5% last month.

The news caused Comex April gold futures to blast below initial support at the 200-day moving average around $1,255 an ounce, eventually hitting a session low of $1,228.20 an ounce. April gold settled the week at $1,234.60 an ounce, down $48.40 or 3.77% on the week.

Although silver was dragged down by falling gold prices, it managed to hold up slightly better. Comex March silver futures ended the week at $16.694, down 46.1 cents or 2.69% on the week.

Analysts have explained that gold sold off on the news because it raises expectations that the Federal Reserve will now be in a position to raise rates as early as June. Analysts have added because it is a fairly sparse week for economic news — with only June retail sales to be released on Thursday as the major data point –, expectations of future Fed monetary tightening will drive market direction, pushing gold lower.

Adam Button, currency analyst at Forexlive.com, said that for the moment the gold market is focused on the U.S. economy, and interest rates, which will translate into lower gold prices in the near-term. He added that he is looking for a test of the next support level at $1,221 an ounce.

“Gold’s technical picture broke down for a reason,” he said. “A June rate hike is back on the table.”

However, Button warns that the market might be too focused on the U.S. market.

“The gold market has lost sight of the global easing going on around the world. Once the market focus on that again I think gold could do well,” he said.

Along with global easing, another factor that analysts say will be important to the global gold market are growing problems in Europe as the European Union and Greece have been unable to develop a renegotiation agreement.

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