The Australian dollar has hit a three-day low as the spot price of gold fell below $US1,200 for the first time in almost three years.
At 1200 AEST on Friday, the local unit was trading at 92.45 US cents, down from 93.17 cents on Thursday.
During morning trade, the Australian dollar fell as low as 92.15 US cents, its weakest level since Tuesday.
August delivery gold overnight fell below the $US1,200 mark in electronic trading after closing at $US18.20, or 1.5 per cent, lower at $US1,211.60 a troy ounce on the Comex division of the New York Mercantile Exchange.
ForexCT head of research Steven Dooley said a lot people were selling gold in Asian markets.
"A lot of institutions or hedge funds in Asia were taking a lot of pain from their gold positions and they were forced to liquidate and that's dragging the Aussie dollar down as the US dollar strengthens," he said.
"It's been funny that we've seen these big moves in gold and then shortly after a big move in the US dollar.
"That's the kind of move when someone really big is moving out of gold."
Mr Dooley said the gold selloff could have something to do with the US Federal Reserve's believed intention to scale back it's $US85 billion-a-month bond purchase program, designed to stimulate the American economy.
"We're continuing to get better and better US economic data every night," he said.
"This economic data is bringing forward expectations of tapering and every morning Asia wakes up and needs to sell more gold."
Of a raft of US economic data that will be released on Friday night, Australian time, Mr Dooley says most will focus on the Chicago Purchasing Managers' Index for June, a key measure of business condition across the three biggest Midwestern states.
He says he expects the Australian dollar to trade as low as 91.90 US cent during offshore trade on Friday night.
Meanwhile, Australian bond futures prices were higher at noon.
At 1200 AEST on Friday, the September 10-year bond futures contract was trading at 96.215 (implying a yield of 3.785 per cent), up from 96.160 (3.840 per cent) on Thursday.
The September three-year bond futures contract was at 97.220 (2.780 per cent), up from 97.140 (2.860 per cent).