Gold tumbles to settle at lowest since early June

Reuters with CNBC

Gold settled at a three-month low on Monday as the dollar recovered losses made after a disappointing U.S. jobs report.

for December delivery ended $13.00 lower at $1,254.30 an ounce, their lowest closing price since June 9. The metal had gained support on Friday from data showing that employers in the United States hired the fewest number of workers in eight months in August.

Spot gold was last down 1.1 percent at $1,255 an ounce.

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``It's the stronger dollar driving the price, but although Friday's non-farm payrolls took the market by surprise, gold managed to close only around $1,271,'' MKS SA head of trading Afshin Nabavi said. ``There's a good possibility that we will see prices test the lower-$1,250 area.''

``The weaker jobs report did not wobble the dollar significantly... financial players and investors in the West stopped buying into gold some time ago and it's still difficult to see them get back into the market when you have much better returns elsewhere.''

Chart: Precious Metals

The dollar rose 0.6 percent against a basket of leading currencies, while European equities dropped after an opinion poll showed supporters of Scottish independence from Britain taking the lead for the first time since the referendum campaign began.

Traders said developments in Ukraine were being watched to see if the ceasefire agreed with the pro-Russian rebels would hold up.

Any worsening of the crisis, which has caused the sharpest confrontation between Russia and the West since the Cold War, could boost gold as it is seen as an insurance policy during times of political and financial uncertainties.