Gold held above $1,300 an ounce on Monday as the dollar softened after mixed U.S. data last week left investors less sure the Federal Reserve would start to scale back its stimulus next month.
Strong U.S. GDP and factory data led to losses of around 3.5 percent early last week, pushing gold below the crucial level of $1,300 an ounce.
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However, prices rebounded after data showed U.S. employers slowed their pace of hiring, which quashed prospects the Fed will start tapering its stimulus as early as September.
Spot gold was unchanged at $1,310.71 an ounce by 0924 GMT. U.S. gold futures for December were also flat, at$1,310.10 an ounce.
"We had a good rally on Friday that seems to have stalled now as the timetable for tapering remains unclear and obviously investors will be watching the data that is coming through now for clearer direction," Societe Generale analyst Robin Bhar said.
"It is positive that gold is holding above $1,300 and obviously the dollar is still relatively weak on the broad dollar index, but I wouldn't be so convinced by the rally unless some of the U.S. data comes in weak," he added.
The dollar softened against the yen and the euro after data showed euro zone business expanded for the first time in 18 months in July. European shares edged up to a two-month high and benchmark U.S. Treasury yields fell to 2.6 percent, well below July's two-year high of 2.755 percent.
As gold pays no interest, the fall in returns from U.S. bonds is seen as positive for the metal.
Gold, seen as a hedge against inflation, had gained in recent years as central banks acted to boost their economies. Prices touched an all-time high of $1,920.30 in 2011.
In recent weeks, the Fed has said it would begin tapering its $85 billion monthly bond purchases if the U.S. economic recovery retained momentum, prompting investors to monitor housing and jobs data closely.
The next data market participants will watch is the U.S. ISM non-manufacturing PMI later in the day.
SPECULATORS CUT LONG GOLD POSITIONS
Hedge funds and money managers trimmed their gold net longs and raised their bullish position in silver futures and options, a report by the U.S. Commodity Futures Trading Commission showed on Friday.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.26 percent to 918.64 tonnes on Friday, touching fresh four-year lows.
"Should prices trade below $1,300 an ounce, an additional sizeable leg of ETP (exchange-traded product) holdings becomes loss-making," Barclays Capital said in a note.
Silver fell 0.3 percent to $19.84 an ounce. It reached a one-week high of $20.27 on Friday.
Platinum was up 0.3 percent at $1,448.74 an ounce and palladium lost 0.2 percent to $727.97 an ounce.