Gold rose 1.4 percent on Monday, its biggest one-day gain in two months, as the dollar's sharp retreat sparked fresh physical demand and short covering after bullion earlier hit a 15-month low, traders said.
Other precious metals rebounded broadly as the dollar's rally took a breather on profit-taking that emerged after Friday's jobs report reinforced the view the Federal Reserve would raise U.S. interest rates in mid-2015. The U.S. dollar index fell 0.8 percent.
Earlier on Monday, the yellow metal fell to its weakest since late June 2013, within reach of a four-year low at $1,180 an ounce. On Friday, gold entered into a correction phase, defined as a 10 percent drop from its most recent high at $1,345 reached in July.
"Gold's drop below $1,200 an ounce is sparking some more physical buying, especially from (Asia)," said Edmund Moy, chief strategist for California-based Fortress Gold, a provider of bullion-backed retirement accounts.
Spot gold rose 1.4 percent to $1,207 an ounce, having earlier hit a 15-month low at $1,183.46. U.S. gold futures settled up $14.40 at $1,207.30 an ounce in heavy trading volume.