Gold gained more than half a percent on Monday after disappointing US jobs data revived hopes for further monetary easing, while appetite for the metal was also boosted as China inflation spiked. Bullion's appeal as a hedge against inflation was burnished as US employers hired far fewer workers in March than in previous months, keeping the door open for the Federal Reserve to provide more monetary support for a still sluggish economy.
A higher-than-expected reading on China's annual inflation in March also supported sentiment in gold, as analysts dismissed the possibility that the data would dissuade Beijing from its pro-growth monetary policy. "If we see more RRR (reserve requirement ratios) cuts, it will be positive for gold as it will raise inflation outlook down the road," said Li Ning, an analyst at Shanghai CIFCO Futures.
Spot gold rose as much as 1 percent in early hours to $1,648 an ounce, before easing to $0.8 by 0649 GMT. Gold dropped more than 2 percent last week after US policymakers showed waning interest in further quantitative easing. US gold gained 0.9 percent to $1,644.30. Data from the US Commodity Futures Trading Commission echoed the sentiment. Speculators cut their bullish bets on gold futures and options in the week ended April 3. In the physical market, jewellers in India called off their three-week-old strike on Saturday, an industry official said, on assurances from Finance Minister Pranab Mukherjee that the government would consider scrapping a budget proposal to levy excise duty on unbranded jewellery.