Gold extended a recovery from recent lows on Monday as its resilience below 1100 an ounce disappointed those expecting a deeper decline but expectations that US interest rates could rise as early as September kept up pressure on prices.
The metal has fallen in the second half of this year on the prospect of rising rates which would lift the opportunity cost of holding bullion while boosting the dollar.
Gold has however found support after sliding to a 5-1/2 year low at 1077 an ounce last month.
Spot gold was up 0.4 percent at 1096.83 an ounce at 1400 GMT while US gold futures for December delivery were up 2.50 an ounce at 1096.60.
“We are seeing a few disillusioned shorts scaling back” Saxo Bank’s head of commodity research Ole Hansen said. “We have been rangebound since the collapse on July 20 with many recently established short positions not performing at these levels.”
The dollar rose 0.2 percent against a basket of currencies on Monday climbing back toward near four-month highs in the wake of Friday’s employment data and keeping some pressure on gold.
US non-farm payrolls increased by 215000 in July less than the 223000 rise that economists had expected but still seen in line with a tightening labour market. Payrolls data for May and June was revised to show 14000 more jobs created than previously reported.
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