Gold futures fell to a one-week low as the dollar headed for the biggest gain in almost 20 months after U.S. payrolls rose more than forecast in June, fueling speculation that the Federal Reserve will scale back stimulus.

The greenback surged 1.4 percent against a basket of major currencies, eroding the appeal of gold as an alternative investment. Payrolls rose by 195,000 workers for a second straight month, the government said today. The median forecast in a Bloomberg survey projected a 165,000 gain.

“A better jobs report means there’s less flight to safety,” Brian Booth, a senior market strategist at Long Leaf Trading Group in Chicago, said in a telephone interview. “The initial reaction to the report was a push higher in the dollar and a rise in stocks, and for as long as that continues, gold will struggle.”

Gold futures for August delivery fell 2.5 percent to $1,220.90 an ounce on the Comex in New York. Earlier, the price touched $1,215.90, the lowest for a most-active contract since June 28. Trading was 57 percent above the 100-day average for this time, according to data compiled by Bloomberg.

Yesterday, the Comex floor was closed for the Independence Day holiday, and spot gold dropped 0.2 percent. Today, the dollar was poised for the biggest increase since Nov. 9, 2011.

Silver futures for September delivery tumbled 3.9 percent to $18.93 an ounce on the Comex. Through July 3, the metal dropped 35 percent this year, the most among the 24 raw materials in the Standard & Poor’s GSCI Spot Index.