Gold settled lower on Monday after a surprise surge in U.S. jobs growth reignited speculation the Federal Reserve could soon start scaling back its monetary stimulus program, denting bullion's appeal.
The U.S. central bank could start cutting back on its $85 billion monthly bond purchases as early as next month, analysts said. Some, however, expect the cutbacks will start next year.
An end to the Fed's quantitative easing program is expected to hurt assets such as gold, which has been boosted by central bank liquidity and low interest rates.
Spot gold hit its lowest since Oct. 17 at $1,278.94 an ounce in early trade, after losing 1.5 percent in the previous session, its biggest one-day fall in about a month. It was last down 0.5 percent to $1,283 an ounce.
U.S. gold futures for December delivery settled $3.50 lower at $1,281.10 an ounce.
"The dollar index is still holding fairly firm, and given the lack of physical interest or significant investor demand near new lows, there is very little upside for the market,'' VTB Capital analyst Andrey Kryuchenkov said. "Gold continues trading with macro headlines and against the greenback.''
Uncertainty remains over when the Fed will begin to rein in its quantitative easing, he added: "Statements from the FOMC (Federal Open Market Committee) have been fairly cautious or even dovish, but data continues to question the Fed's current accommodative stance ...Policymakers can afford to wait a little longer, but pressure is growing.''
The dollar eased against a basket of currencies, but remained near Friday's two-month high, set after a key U.S. employment report showed employers added 204,000 new jobs in October, soundly beating forecasts.
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