The price of gold edged up on Monday, snapping an eight-day losing streak as the dollar retreated, but still hovered near its lowest level in three months as surging US jobs data boosted expectations of a US rate rise in December. Spot gold was up 0.1 percent at $1,089.17 an ounce by 1455 GMT, while US gold futures for December delivery rose $1.90 to $1,189.60 an ounce.
"Until the Fed rate hike there is going to be continued concern about where is the floor for gold, whether at current levels or significantly lower," ING Bank senior strategist Hamza Khan said. US data on Friday showed employers outside the farming sector added 271,000 jobs in October, the most in 10 months, and the jobless rate fell to a 7-1/2-year low of 5 percent. Economists had forecast nonfarm payrolls increasing 180,000 and the unemployment rate remaining at 5.1 percent.
As a result, investors increased bets that the first US rate increase in nearly a decade will come next month, sending non-interest-paying gold to $1,084.90 an ounce on Friday, the lowest since August. This leaves the metal vulnerable to further declines, with the next support at its 5-1/2-year trough of $1,077 hit in July. "This back-and-forth on expectation of what the Fed will do is going to keep the market busy in the short term at least," Julius Baer analyst Carsten Menke said.
"We really have to concentrate on whether growth is sound in the US (but) we are not going to have an inflation problem, so from that perspective there is no investment case to be done for gold," he added. Following the jobs report, futures markets were pricing in a 70 percent probability of a December rate hike, up from 58 percent before the data. Assets in SPDR Gold Trust, the top gold-backed exchange-traded fund, fell 0.40 percent to 669.09 tonnes on Friday, the lowest in nearly three months, as investors exited bullion.
Hedge funds and money managers cut a bullish stance in COMEX gold as they trimmed a silver net long position from a record high in the week to November 3, US Commodity Futures Trading Commission data showed on Friday. More industrial precious metals were pressured by a fresh batch of soft Chinese trade data, which could signal slower demand. Palladium fell 4 percent to $593.50 an ounce, its lowest in seven weeks. Prices posted the biggest weekly fall since September 2011 last week, also hurt by sharp outflows from exchange-traded funds. Silver dropped 1.2 percent to a 5-week low of $14.56 an ounce and platinum fell 2.4 percent to $912.75 an ounce.