Gold settled modestly higher on Monday lifted by a dollar drop and comments by a senior Fed official that the U.S. central bank should keep up its monetary stimulus.
Bullion investors looked toward U.S. jobs data later this week for trading cues. The precious metal was moving in a $10 range with less-than-average turnover due to a light schedule of U.S. economic indicators on Monday, traders said.
Gold prices were supported after St. Louis Federal Reserve President James Bullard said on CNBC's "Squawk Box" that the Fed should not rush a decision to scale back its asset purchase program because of low inflation.
Some investors stayed on the sidelines ahead of Friday's all-important October U.S. nonfarm payrolls report, which will give financial markets an idea on whether the U.S. central bank will maintain its bond-buying stimulus for a while longer.
"Gold is still very dependent on economic weakness and extended quantitative easing to prosper at the moment,'' said Saxo Bank's head of commodity strategy Ole Hansen.
The metal was also underpinned by fresh buying and short covering triggered by a drop earlier in the day toward technical support around $1,300 an ounce, Hansen said.
Outflows from gold-backed ETFs resumed on Friday, when holdings of New York's SPDR Gold Shares declined 5.7 tons, their largest one-day outflow since Oct. 21.
The sharp drop in prices last week has failed to revive physical demand, and some dealers say the price may have to fall below $1,300 to attract more buyers.
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