SINGAPORE: Gold stayed below $1,200 per ounce on Monday, retaining overnight losses as a robust US nonfarm payrolls report boosted the dollar to a more than five-year high, denting bullion's appeal as a hedge.
Spot gold was steady at $1,192.55 an ounce by 0337 GMT, after losing 1.1 percent on Friday when data showed US employers added the largest number of workers in nearly three years in November and wage gains picked up.
The dollar was trading close to its highest since March 2009 on the back of the strong jobs report.
Investors fear the strength in the economy could draw the Federal Reserve closer to raising interest rates and decrease demand for gold, a non-interest-bearing asset.
"We suspect that gold will likely be at its most vulnerable over next three to six months, which is when we see the highest likelihood of a rate hike that should sweep the dollar higher," INTL FCStone analyst Edward Meir said.
"In addition, the recent rout in energy prices will lower inflationary expectations and increase real interest rates, yet another reason that we would be cautious about gold's upside potential."
Gold prices tend to fall in tandem with oil as lower energy prices is perceived to lower inflationary pressures. Bullion is seen as a hedge-against raising prices.
Oil prices fell on Monday to near their lowest levels since 2009 on oversupply worries, with more declines predicted by analysts.
For now, some market players say gold could hold near $1,190 levels on recent data on investor positioning.
Hedge funds and money managers boosted their bullish position in US gold contracts to the highest since August in the week to Dec. 2, data shows.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.12 percent to 720.91 tonnes on Friday, though still close to a six-year low.
"There looks to be some underlying strength in the market however, as the yellow metal convincingly held $1,180 on Friday following the nonfarm payroll print," said Sam Laughlin, metals dealer at MKS Group.
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