Gold extended losses and hit its lowest level in two weeks on Thursday after the dollar strengthened on upbeat U.S. job growth data, raising fears of more sell-offs in coming days.

Other precious metals tracked gold. Platinum fell more than 2 percent and hit a five-week low with selling in Japanese futures further weighing on sentiment, while silver hovered below the six-month high of nearly $15 an ounce it reached this week.

Spot gold hit a low of $626.70 an ounce, its lowest since Nov. 22, down from $630.60/632.10 late in New York on Wednesday, when it had fallen nearly 2 percent.

"The thoughts were that we would be looking to test and break through $650 again and probably up towards $675. Given we're sort of below that, I would think investors might be a little bit more cautious," said Darren Heathcote of Investec Australia.

"I think we need to be a little bit more cautious now about where gold goes in the next few days. If it remains below $630s, I would think that we'll be targeting $620 again," said Heathcote, referring to a level last seen in mid-November.

Gold rallied to a 16-week high at $649.50 an ounce last Friday -- just below the stubborn $650 resistance level.

Benchmark gold futures on the Tokyo Commodity Exchange, currently October 2007, fell 35 yen per gram to 2,345 yen ($20.37), reflecting declines in New York's COMEX market.

Gold has gained on a weaker dollar before the U.S. currency changed course after surprisingly strong U.S. data on employment and service sector growth offset other figures showing manufacturing activity contracting.

A trail of weak economic data has investors bracing for the Federal Reserve to slash interest rates from the current 5.25 percent as many as three times next year -- even as Fed officials have indicated they remain worried about price pressures.

"A rise in the dollar and position unwinding ahead of the Christmas holiday season kept downward pressure on the precious metals market," said Hiroyuki Kikukawa, an associate director at Nihon Unicom Inc.

The European Central Bank's policy meeting later in the day could affect the currency market and precious metal prices, he said.

The dollar held gains scored in New York after a private-sector report showed solid U.S. job growth in November, boosting chances of a positive payrolls report later in the week.

The dollar was little changed at 115.10 yen , up from a four-month low of 114.43 yen hit on Tuesday. The euro was hardly changed at $1.3291 , hovering below a 20-month peak of $1.3370.

The physical sector slowed to a trickle, suggesting that jewellers and investors were waiting for more declines.

"I don't think people will buy at this level. We will probably see some interest at around $600," said a dealer in Hong Kong.

"Technically, the market has changed direction," said the dealer, adding that gold was now below the 14-day moving average around $635.