LONDON: Gold edged higher on Monday, as investors found value after a two-day slide caused by heightened concerns the US central bank could start tapering its monetary stimulus, but gains were held back by a rocketing dollar.
Bullion has fallen 10 percent since Federal Reserve Chairman Ben Bernanke said last month the US economy was recovering strongly enough for the $85 billion monthly bond buying stimulus to be reduced later this year.
The tapering would support a rise in interest rates and bolster the dollar, making gold less attractive.
Data on Friday showed that US employers added 195,000 new jobs to their nonfarm payrolls last month, indicating that the improvement in the jobs market remains on track.
"We had a good NFP number on Friday but the unemployment rate remains unchanged at 7.6 percent and it is not a done deal that the Fed will start tapering its bond-buying in September," Peter Fertig of Quantative Commodity Reaserch said.
"But one development will take place over the medium run and that is the strengthening of the dollar against major currencies."
Spot gold was up 0.3 percent to $1,226.70 an ounce by 0944 GMT. Comex gold futures for August rose $12.60 to $1,225.10.
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