Gold settled lower after a quiet trading session on Monday, weighed down by lack of investment interest after Friday's short-covering rally by bullion investors who had feared U.S. job gains would sharply exceed Wall Street's expectations.
Investors took profits after gold gained more than 1 percent on Friday, its biggest one-day jump in three weeks, after the nonfarm payrolls data showed U.S. employers hired at a brisk pace of 192,000 jobs last month, slightly below economists' estimate of 200,000.
Turnover was low on Monday, with trading volume at only 65,000 lots, on track to finish sharply below the 30-day average of 200,000 lots, preliminary Reuters data showed.
"Investors are not taking any interest in the precious metals right now, and gold and silver are definitely in tight trading ranges," said Jonathan Jossen, a COMEX gold options floor trader.
Chart: Precious Metals
for June delivery settled $5.20 lower at $1,298.30 an ounce.
Meanwhile, spot gold dropped 0.4 percent to $1,297 an ounce, after recording its biggest one-day percentage increase since March 12 on Friday, when it hit a one-week high of $1,306.50.
Investors had speculated that a strong jobs figure, which followed a recent string of positive economic data, could prompt a quicker tightening of U.S. monetary policy. Gold had endured heavy selling ahead of the data, hitting a seven-week low of $1,277.29 last Tuesday.
The state of the U.S. economy will continue to be the prime factor driving gold prices in the near term, while monetary policy by the U.S. Federal Reserve and the European Central Bank should impact prices in the longer run, analysts said.
The next market focus is the release on Wednesday of the minutes of the Fed's FOMC meeting last month.
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