LONDON: Gold inched lower on Monday, easing below $1,300 an ounce, as investors cashed in gains following its biggest one-day jump in three weeks, after a soft monthly jobs report last week allayed worries about an early rise in U.S. interest rates.
Bullion rose 1.2 percent on Friday after March non-farm payrolls came in slightly below the consensus estimate for a 200,000 jobs increase at 192,000, but retreated from those levels on Monday.
Spot gold was down 0.2 percent to $1,299.50 an ounce by 1411 GMT, after recording its biggest one-day percentage increase since March 12 on Friday. Gold futures for April delivery lost 0.3 percent to $1,299.60 an ounce.
Investors had speculated that a strong jobs figure, which followed a recent string of positive economic data, could prompt a quicker tightening of U.S. monetary policy. Gold had endured heavy selling ahead of the data, hitting a seven-week low of $1,277.29 last Tuesday.
"In hindsight, the non-farm payrolls were relatively disappointing, given that there was a month-on-month decline," Jonathan Butler, an analyst at Mitsubishi, said.
"Clearly, once gold got above $1,305 there was potential for some profit taking, which is what we've seen today," he added. "It's going to remain data-driven."
On the wider markets, the dollar lost ground against the yen and dipped versus the euro on Monday as last week's jobs data disappointed some who had bet on a number strong enough to break this year's tight trading ranges.
The state of the U.S. economy will continue to be the prime factor driving gold prices in the near term, while monetary policy by the U.S. Federal Reserve and the European Central Bank should impact prices in the longer run, analysts said.
The next market focus is the Fed minutes for the March FOMC meeting on Wednesday.
"The Fed minutes are out this week and I think gold is going to look at that ... obviously the focus will be on when the rates will be raised, which people may start analysing," Standard Bank analyst Walter de Wet said.
MORE DOVISH
Federal Reserve Chair Janet Yellen indicated on March 19 that the central bank could raise interest rates in the first half of 2015. Yellen was more dovish in a speech on March 31, when she defended the Fed's supportive measures.
Low interest rates, which cut the opportunity cost of holding non-yielding bullion above other assets, had been an important factor driving bullion higher in recent years.
Investor sentiment remained muted - holdings in the world's largest gold-backed exchange-traded fund SPDR Gold Trust falling 1.80 tonnes to 809.18 tonnes.
Hedge funds and money managers reduced their bullish bets in gold futures and options for a second straight week, data from the Commodity Futures Trading Commission showed.
In the physical markets, demand was subdued as markets in top buyer China were closed for the Tomb Sweeping holiday.
Weak physical demand has weighed on gold prices recently, due to discounted prices and weak imports by China over the last month.
In other precious metals, platinum fell 0.9 percent to $1,430.99 an ounce and palladium was down 0.6 percent at $782.10 an ounce.
Holdings of the world's largest platinum-backed exchange-traded fund, Johannesburg's NewPlat ETF, breached 1 million ounces for the first time last week, data from the fund showed, as a strike in the South African platinum sector prompted new buying.
Silver was up 0.1 percent to $19.90 an ounce.
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