Gold fell over 2 percent on Monday as the dollar rose, nearly wiping out its previous session's rally, but signs of renewed buying interest in the U.S. futures market could underpin prices, traders said.
A combination of oil futures tumble and higher U.S. stock markets also weighed down on the yellow metal's appeal as a safe haven.
On Friday, it rallied almost 3 percent after U.S. payrolls data marginally missed expectations, sending the dollar lower.
While most analysts had cited short covering for Friday's gains, exchange data suggested speculators might have increased new bullish bets in the gold futures market.
CME's latest data showed COMEX open interest on Friday unexpectedly climbed about 16,000 lots, or 4 percent, to 434,295 lots, a 15-month high.
``Some people interpret that as new longs have decided to enter the market,'' said Paul Sacks, principal and chief investment officer at Aurum Options Strategies in New York.
Improved physical demand at lower prices and gold's holding support at its key 38-percent Fibonacci retracement level should also underpin bullion prices, Sacks said.