Gold fell 1 percent on Monday as a short-covering rally that boosted prices from 4-1/2-year lows lost steam, with buyers wary that rising stock markets, upbeat US data and softening investment flows would spell further falls. The metal rebounded from a low of $1,131.85 an ounce on Friday after US payrolls data marginally missed expectations to jump 3.1 percent, their biggest one-day rise since June 19.
That move petered out early on Monday. Spot gold was down 1.1 percent at $1,165.45 an ounce at 1441 GMT, while US gold futures for December delivery were down $4.50 at $1,165.30. "I don't see a reason why gold prices would continue going up - there are more reasons for prices to go down," Natixis analyst Bernard Dahdah said, citing expectations for more strength in the dollar and rising US interest rates.
"By the end of the year, we think it'll be below $1,200, and probably $1,150." Investment interest in gold has been lacklustre, as investors favoured equities. A deal giving global investors easier access to China's stock market lifted world shares to their highest in over a month on Monday. Hedge funds and money managers slashed bullish bets in gold futures and options to a four-week low after prices tumbled, data showed on Friday.
The largest gold-backed exchange-traded fund, SPDR Gold Shares, said its holdings fell 5.7 tonnes on Friday, its biggest one-day outflow in nearly three weeks. "The market still looks vulnerable," Simon Weeks, head of precious metals at Bank of Nova Scotia, said. "There are a lot of people who'd prefer to see positive economic data, equities higher, ETFs lower, and I don't think anything's going to change that in the short term."
Heavy volumes of both buying and selling were seen on the Shanghai Gold Exchange overnight. Premiums in top consumer China ranged between $1 and $2 on Monday, steady from Friday. Silver was down 1 percent at $15.62 an ounce, spot platinum was down 1 percent at $1,200.50 an ounce, and spot palladium was down 0.3 percent at $765.72 an ounce.