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Gold ends lower after biggest monthly gain in 3 years

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Gold prices slipped on Monday as buyers cashed in gains after the metal posted its biggest monthly rise in three years in January, but a shaky outlook for the global economy underpinned its appeal as a haven from risk.

was last down 0.2 percent at $1,280 an ounce, while U.S. gold futures for April delivery settled $2.30 lower at $1,276.90 an ounce. Gold rose 8.4 percent last month, its biggest monthly increase since January 2012.

That rally was sparked by concerns over the European economy after the Swiss National Bank scrapped the franc's peg to the euro, the European Central Bank announced quantitative easing and Greece elected the anti-bailout Syriza party.

Time for gold to regain its shine?

Gains have been tempered, however, by a perception that the United States is still on track to raise interest rates for the first time in nearly a decade this year, lifting the opportunity cost of holding non-yielding gold while boosting the dollar.

Traders are awaiting U.S. data due this week for further clues on the timing of a U.S. rate rise, particularly non-farm payrolls numbers on Friday.

Read MoreWill gold ever top $1,300 again?

"Strong numbers this week from the U.S. could force the market to adjust more towards the FOMC hawkish stance, and that's negative (for gold)," Saxo Bank's head of commodity strategy Ole Hansen said.

"On the other hand, the compression of bond yields and negative yields have most likely caused a rethink about gold, so while I see the risk of a deeper correction below $1,250, I think weakness could be met with additional buying."

Data on Monday showed U.S. consumer spending recorded its biggest decline since late 2009 in December. The markets appeared to shrug off the numbers, however, with U.S. stocks opening slightly higher.

Traders will also be closely watching the new Greek government's attempts to persuade a sceptical Europe to accept a new debt agreement. British finance minister George Osborne said on Monday the stand-off over Greek debt was becoming the biggest risk to the global economy.

"(Gold) could struggle now unless the headlines over Greece are so negative that that supports gold further, and we get more safe haven buying," Societe Generale analyst Robin Bhar said.