Gold fell on Monday, under pressure from last week's strong U.S. payrolls data, and after a sharp drop in Chinese exports fuelled heavy selling of commodities by prompting concerns of a slowdown in the world's second-largest economy.
Continue Reading Below
Prices took support, however, from tensions in Ukraine, where concerns over Russia's intervention in Crimea have kept investors on edge.
Spot gold was down 0.4 percent at $1,334.50 an ounce by 1035 GMT, while U.S. gold futures for April delivery fell by $3.20 an ounce to $1,335.00.
The precious metal fell 0.8 percent on Friday after data showed U.S. employers added 175,000 jobs to payrolls, beating forecasts and suggesting the Federal Reserve's stimulus tapering efforts will stay on course.
The dollar index bounced off four-month lows in the wake of the data, while U.S. Treasury yields rose to their highest in six weeks.
"Clearly gold is battling headwinds coming from the improving U.S. economy, certainly on the jobs front," Societe Generale analyst Robin Bhar said. "We see a close (negative) correlation between gold and the U.S. 10-year yield, which spiked up on Friday, and saw gold at its recent lower levels."
"There's some risk aversion, though, which should be supportive. I'd expect to see a broad $1,330-1,350 range."
On the wider markets, commodities sold off after the surprise fall in China's exports, with copper sinking to 8-1/2-month lows, while oil lost more than a dollar and Shanghai-traded commodities slumped.
Asian stocks also fell sharply and the dollar stepped back from its recent highs after the news, although stocks clawed back some lost ground in Europe.
China, the world's biggest consumer of many commodities including gold, said on Saturday that its exports unexpectedly tumbled in February, swinging the trade balance into deficit.
Chinese prices were trading at a discount of $5-$6 an ounce to spot prices on Monday, traders said, in a sign of weak demand. Prices were at a premium of over $20 at the beginning of the year.
Two-way flows were evident in Asian gold trading overnight, MKS said in a report. "Once the Shanghai Gold Exchange opened some aggressive selling ensued, driving the price below $1,330," it said. "Once again retail bids below this level emerged and supported the market."
Investor sentiment towards gold has been positive this year after a 28 percent drop in prices in 2013.
Hedge funds and money managers raised their bullish bets in gold futures and options for a fourth consecutive week as geopolitical tensions boosted speculative interest to the highest in more than a year, according to Friday data from the Commodity Futures Trading Commission.
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings rose 1.5 tonnes on Friday, its first inflow since Feb. 25.
Among other precious metals, silver was up 0.2 percent at $20.93 an ounce.
The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, eased back from Friday's one-month high above 64 as silver outperformed.
Spot platinum was down 0.8 percent at $1,465.49 an ounce, while spot palladium was down 1 percent at $771.47 an ounce.