Spot gold rebounded on Monday as Asian buyers rushed to snatch bargains after a nearly 2-percent drop in the previous session, while uncertainty ahead of a deadline for Greece to accept the terms of a new bailout deal also supported prices. Surprisingly strong US jobs data on Friday boosted equities and industrial metals, but bullion recorded its biggest daily fall in more than a month as the data dampened hopes of fresh quantitative easing measures.
Analysts and traders, however, remain positive on the outlook for gold as a murky global economic outlook amid a festering euro zone debt crisis is expected to prompt central banks to keep their monetary policies accommodative. "The QE3 (third round of quantitative easing) is less likely after the jobs data, but the longer-term low interest rate outlook is still potentially supportive of gold," said Nick Trevethan, senior commodity strategist of ANZ in Singapore.
Spot gold gained 0.5 percent to $1,733.75 an ounce by 0614 GMT. US gold edged down 0.2 percent to $1,736.40. Technical analysis suggested spot gold could rise to $1,742 an ounce, Reuters market analyst Wang Tao said. Bargain hunting from Asian buyers, especially from China, also helped the rebound in gold, traders said.
Strong demand from China as well as India will likely continue buoying sentiment in bullion, said Trevethan of ANZ. China, the world's largest gold producer, churned out a record of 360.95 tonnes of gold in 2011, which pushes the annual consumption to at least 800 tonnes based on calculations factoring the gold flow from Hong Kong to the mainland in the first 11 months of the year.
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