Renewed strength in the U.S. labor market is threatening to derail the gold rally that sent futures to the best first half in almost four decades.

Employment jumped in July for a second month and wages climbed, boosting bets that the Federal Reserve may raise U.S. interest rates this year and sending gold to its biggest loss in more than 10 weeks.

Bullion has extended gains this quarter, helped by low interest rates and pledges by central banks from Europe to Japan to continue to crank up stimulus spending. Low rates are a boon for gold because they keep the metal more competitive against assets like bonds that pay interest.

“Some people in the market think that rates are going up and therefore the reason to own gold is not as strong,” said Bob Phillips, the Indianapolis-based managing principal at Spectrum Management Group, which oversees $500 million.

Gold futures for December delivery dropped 1.7 percent to settle at $1,344.40 an ounce at 1:48 p.m. Friday on the Comex in New York, the biggest loss since May 24. Prices had the first weekly decline in three weeks.

The odds of the Fed raising rates by December climbed to 46 percent on Friday, from 37 percent a day earlier, Fed-fund futures data compiled by Bloomberg show.

Payrolls climbed by 255,000 last month, exceeding all forecasts in a Bloomberg survey of 89 economists, following a 292,000 gain in June that was a bit larger than previously estimated, a Labor Department report showed Friday. The jobless rate held at 4.9 percent as many of the people streaming into the workforce found jobs. The average hourly earnings rose a more-than-forecast 0.3 percent from a month earlier, the most since April.

The bigger picture for the gold market shows governmental efforts to boost slow-growing economies ultimately will benefit prices this year, Phillips said.

“You’ve got England, Europe and Japan all expanding their monetary easing by printing money,” he said. “I think gold prices will probably continue to move higher.”