Gold held on to a small loss from the previous session on Monday, as the dollar firmed amid expectations of a US Federal Reserve interest rate hike in September and fears of escalating trade tensions between the United States and China.

Spot gold was down 0.1 per cent at $1,194.61 at 0225 GMT, having fallen 0.4 per cent in the previous session. US gold futures were almost flat at $1,200.30 an ounce.

“The strong US nonfarm payrolls led to some modest downward pressure on gold ... Going forward though, the USdollar will continue to weigh on gold, and as long as the dollar is strong, gold will remain constrained,” said John Sharma, an economist at National Australia Bank.

Stronger-than-expected US payrolls data on Friday cemented expectations that the US Fed will raise interest rates in September, in what would be its third hike this year.

The dollar firmed against a basket of major currencies on Monday thanks to the jobs data and after US President Donald Trump warned tariffs on a further $267 billion worth of Chinese imports, on top of earlier promises to levy duties on $200 billion worth of Chinese goods.

“It appears that the US will be able to weather the impact of the trade war for the time being, but the question is how long. With the imposition of tariffs, US exports will be negatively impacted as well,” Sharma said.

Gold has fallen over 8 per cent this year as concerns over trade disputes, currency weakness in emerging markets and rising US interest rates have strengthened the dollar, making bullion more expensive for buyers with other currencies.

“The markets continue to look for that golden lining. But the primary issue is (safe) haven demand remains fleeting in the presence of the stronger dollar narrative,” said Stephen Innes, Asia-Pacific trading head at OANDA.

Investors increased their bearish stances in COMEX gold and silver contracts to the biggest on record in the holiday-shortened week to September 4. Holdings of gold by exchange traded funds have fallen over 4 million ounces since touching a peak in late April.

While gold bulls are buying whenever there is a pull back to the low $1,190s, the general malaise for commodities, coupled with the stronger dollar, suggest sellers are emerging on the rallies, Innes said.

Among other precious metals, spot silver was up 0.1 per cent at $14.11. Platinum rose 0.3 per cent to $781.30, while palladium fell 0.4 per cent to $976.97, after hitting over 11-week highs on Friday at $990.