Gold steadied below last week's 13-month high on Monday, its recent rally doused by robust US employment data that underpinned expectations that the Federal Reserve could raise interest rates this year. But the Fed is unlikely to lift rates as soon as next week during its policy meeting, providing some support to non-interest bearing gold.
Spot gold was up 0.2 percent at $1,262.05 an ounce by 0646 GMT. The metal peaked at $1,279.60 on Friday, its strongest since February 3, 2015, but then slipped on data showing that US nonfarm payrolls rose by a forecast-beating 242,000 last month. "Despite the very strong nonfarm, it seems that the expectations for a March hike are still fairly low," said OCBC Bank analyst Barnabas Gan, and the scenario of the Fed staying put at its March 15-16 meeting was "supporting gold at this juncture."
But Gan said he remains bearish on gold prices, predicting they will be at around $1,000 to $1,150 by year-end, with the Fed likely to raise interest rates at least once this year. US gold for April delivery dropped 0.6 percent to $1,263.70. HSBC analyst James Steel believes the rally in gold remains largely intact with the metal not falling sharply despite the strong US jobs data. "But at these high prices restrained physical demand may begin to temper the rally and we could be in for some profit taking or liquidation," Steel wrote in a note.