Gold fell more than 1 percent on Monday from the prior session's three-week high, after the dollar was lifted by Friday's upbeat US jobs data that reinforced expectations that the Federal Reserve will raise interest rates next week. A short-covering rally initially swept bullion after the data on Friday, though robust US data would typically send gold lower, as it would support the case for a rate increase. This lifts the opportunity cost of holding non-yielding assets such as gold.
Spot gold was down 1.1 percent at $1,074.90 an ounce at 2:01 pm EST (1901) GMT. US gold futures for February delivery settled down 0.8 percent at $1,075.20. A tumble in crude oil futures to a near seven-year low also pressured gold prices, traders said. Gold prices have fallen 9 percent so far this year, largely on the back of expectations that US interest rates are set to rise for the first time in nearly a decade. The focus remains very much on next week's US central bank meeting.
"Most people have been looking at the potential for a rate hike in the US and pretty much that alone, ignoring all other news," Simon Weeks, head of precious metals at the Bank of Nova Scotia, said, adding: "There must have been people who were caught short on Friday." Spot platinum made the biggest fall among precious metals, dropping as much as 3.4 percent to $849.50 an ounce. Silver was down 1.4 percent at $14.35 an ounce and palladium was down 2.3 percent at $550.65 an ounce.