Gold edged lower on Monday as the dollar steadied and equity markets rallied following upbeat US jobs data last week that came as more evidence the economy had regained speed after a first-quarter lull.
Asian share markets enjoyed a relief rally as the upbeat US jobs data on Friday lessened immediate concerns about the health of the world's largest economy, while the long-run fallout from Brexit kept sovereign yields near record lows.
The dollar index inched up 0.4 per cent to 96.670, hovering near an 11-day high of 96.697 hit on Friday. Spot gold was trading down 0.3 per cent at $1,362.35 an ounce at 0653 GMT. The yellow metal, which hit a low of $1,335.68 an ounce ahead of better-than-expected U.S. jobs data, rose in early trade to just shy of a more than 2-year high of $1,374.91 hit on July 6.
US gold was up 0.4 per cent at $1,363.90 an ounce, after earlier hitting a high of $1,376.50. U.S. job growth surged in June as manufacturing employment increased, but tepid wage growth could see the Fed remain cautious about hiking interest rates.
"The market is really comfortable with the view that the US Federal Reserve is not going to raise rates in the immediate term despite the positive data, on the back of continued concern in the global markets around the Brexit vote," ANZ analyst Daniel Hynes said.
"The volatility shows that investor demand is still very strong.” US employers have been adding enough jobs over the last six months to put the economy on track, but that prospect alone is unlikely to get the Fed to step on the brakes with interest-rate hikes. Lower rates tend to boost gold prices because they cut the opportunity cost of holding non-yielding bullion while weighing on the dollar, in which it is priced.
"July will likely be an unusual month whereby both gold and equity markets could jointly push higher, as the global easing campaign is expected to persist far longer than was believed only a few weeks ago,” said INTL FCStone analyst Edward Meir. Speculators continued to flock to gold and silver. In gold, they increased their net long position on COMEX for a fifth straight week in the week to July 5, to the highest since records became publicly available in 2006. Holdings in SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, rose 0.30 per cent to 981.26 tonnes on Friday. Spot gold may fall towards its July 8 low of $1,335.68 per ounce, as it failed to break a resistance at $1,375, according to Reuters technical analyst Wang Tao. Silver was up 0.34 per cent at $20.33 an ounce, platinum fell 0.2 per cent to $1,094.75 and palladium was nearly unchanged at $614.90.