Gold fell 0.8 percent on Friday to its lowest price since January, and silver slumped 3 percent to a four-year low as the dollar surged on bets that U.S. interest rates could rise sooner than expected.

Gold fell 0.8 percent on Friday to its lowest price since January, and silver slumped 3 percent to a four-year low as the dollar surged on bets that U.S. interest rates could rise sooner than expected.

Silver's drop was its biggest one-day drop since Dec. 12, 2013. Platinum fell to a fresh 2014 low while palladium also hit a three-month low.

The dollar rose against a basket of currencies, on track for its 10th straight week of gains.

The S&P 500 equities index rose to an intraday record high, as Alibaba Group Holding Ltd's shares surged in their first day of trading in what looks likely to be the largest IPO in history.

"It's the same story since last week. Gold is under pressure with the dollar at an extremely lofty level, U.S. equities at all-time high, and expectations that U.S. interest rates will rise eventually," said David Meger, director of metals trading at brokerage Vision Financial.

Spot gold was down 0.8 percent at $1,215.50 an ounce by 2:50 p.m. EDT (1850 GMT). The session low of $1,213.61 was the lowest since Jan. 2.

For the week, gold posted a 1 percent drop for its third consecutive weekly fall.

US COMEX gold futures for December delivery slid $7.80 to $1,219.10, with trading volume about 45 percent above its 30-day average, preliminary Reuters data shows.

Economic optimism has sapped gold's safe-haven appeal. US economic activity rose less than expected in August, but was still consistent with a moderate expansion, The Conference Board said on Friday.

Among other precious metals, silver was down 3.4 percent to $17.84 an ounce. It touched $17.76, its lowest since August 2010.

Technical selling after silver broke below the $18 level accelerated the metal's drop, traders said. Earlier in the week, its 50-day moving average fell below its 200-day moving average, a bearish formation known as a death cross.

Platinum dropped 0.9 percent to $1,331 an ounce and palladium fell 2.1 percent to $809.46 an ounce.

On platinum's chart, an imminent death cross suggests frustrated investors could sell more of the precious metal, which has failed to rally despite a five-month mining strike in top producer South Africa earlier this year.