Gold rose for the second straight session on Monday, after falling in the preceding eight, buoyed by post-holiday buying in China, while a slowdown in US job growth bolstered expectations that US interest rate hikes would only be gradual. Spot gold was up 0.5 percent at $1,262.43 an ounce by 0736 GMT. US gold futures rose 1 percent to $1,264.30 an ounce.
"Gold prices are quite appealing after the recent correction. In China, what we see today is that there is some demand to buy gold following its dip," said Richard Xu, a fund manager at HuaAn Gold, China's top gold exchange-traded fund (ETF). Bullion touched a four month low of $1,241.20 on Friday. Spot gold ended about 4.5 percent lower last week, its biggest weekly decline since November 2015.
"Early buying was evident from both speculators and physical traders, with investors expecting the return of the Chinese - after a week-long break - to see some decent buying," said Alex Thorndike, senior precious metals dealer at MKS PAMP Group. Gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion.
Spot gold may break a resistance at $1,266 per ounce and edge up to the next resistance at $1,276 before resuming its downtrend, according to Reuters technical analyst Wang Tao. "Talks related to the presidential election don't count. Once elected most candidates follow the same practices. They don't opt for extreme measures like they promise in their campaigns," said Mark To, head of research at Hong Kong's Wing Fung Financial Group. Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 1.19 percent to 958.90 tonnes on Friday.