Gold nursed losses on Monday, after a strong U.S. jobs report triggered speculation that the Federal Reserve could raise interest rates sooner than expected.
Spot gold eased 0.1 percent to $1,220.60 an ounce by 0038 GMT, after dropping 0.8 percent on Friday.
Nonfarm payrolls rose by 215,000 last month, higher than expectations of 205,000, underscoring the strength in the U.S. economy.
U.S. interest rate futures suggested traders are now betting the Fed will next raise rates as soon as November,versus December ahead of the report.
Wall Street's top banks held firm to their expectation for a rate hike in June and expect a total of two hikes this year, a stance little changed from a month ago, according to a Reuters survey conducted on Friday.
Investor positioning in gold is largely bullish. Hedge funds and money managers boosted their bullish bet in gold in the week to March 29, to the highest since the end of 2012, as traders speculated over the timing of interest rate hikes, U.S. Commodity Futures Trading Commission data showed on Friday.
Gold fell more than 1 percent on Friday after U.S. March payrolls data beat expectations, allaying some fears about the U.S. economy and stoking speculation about the timing of likely interest rate hikes by the Federal Reserve this year.
U.S. employers added 215,000 jobs in March, the payrolls report showed, against expectations for 205,000. U.S. interest rate futures suggested traders are now betting the Fed will next raise rates as soon as November, versus December ahead of the report.
Gold had risen as much as 2 percent earlier this week after Fed Chair Janet Yellen said the U.S. central bank should proceed only cautiously with further interest rate increases. The metal slid 3 percent last week after hawkish comments from several Fed officials.
Ronald-Peter Stoeferle, fund manager at Incrementum AG and author of the In Gold We Trust report, said he is not surprised that gold investors are taking profits following a slightly better-than-expected employment report.
“Gold was due for a selloff,” he said. “Right now the market is working off its overbought situation.”
However, Stoeferle said he remains optimistic on the yellow metal as the U.S. dollar looks top-heavy. “I think we can say that the U.S. dollar bull market is over and ultimately that is going to be good for gold,” he said.
The market will be monitoring economic data, any speeches by Federal Reserve officials, plus economic and other news in Europe to get a feel for where the dollar is heading, said Phil Flynn, senior market analyst with Price Futures Group. Gold has a tendency to move inversely to the U.S. currency.
The gold market could remain volatile in the near term as sentiment remains at odds between retail investors and market professionals, according to the Kitco News Wall Street vs. Main Street Gold Survey.
According to Kitco News’ online survey, positive sentiment among Main Street investors is higher with a clear majority bullish on prices in the near term. This week, 603 participated in an online and Twitter poll. Of those, 364, or 60%, said they expect to see higher prices next week; at the same time, 112 people, or 27%, said they expect to see lower prices next week; and 46 people, or 13%, are neutral on the market.
Reference: Reuters, Kitco
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