×

Gold flat as stronger dollar offsets impact of mixed US data

Gold
Getty Images

Gold fell on Monday as the impact of a rebounding dollar, over talks between Greece and euro zone finance ministers, was offset by mixed U.S. data supporting bets the Federal Reserve will not raise rates until late 2015.

Spot gold was down 0.3 percent at $1,187.50 an ounce, after posting a modest weekly fall in the previous week. U.S. gold futures for June delivery settled down $5.90, at $1,183.00 an ounce.

The dollar rebounded 0.2 percent versus a basket of currencies, mostly due to euro weakness as Greece, which must repay a 750 million euro ($837 million) loan to the International Monetary Fund on Tuesday, faces the risk of defaulting and being forced out of the euro zone.

"We are seeing the first signs that the dollar correction we have seen for a few weeks may have run its course for now, and that attracts some attention to the downside," Saxo Bank senior manager Ole Hansen said.

"People may be worried about Greece, but at the same time they are not prepared to take investment decisions based on that."

The U.S. currency had weakened after U.S. jobs data on Friday showed April nonfarm payrolls increased roughly in line with forecasts but the March figure was revised significantly downward.

The data tempered views that a U.S. rate rise could come at the Fed's next policy meeting in June.

Read MoreLooking for safety? Keep looking

However, the unemployment rate dropped to a near-seven-year low, suggesting underlying strength in the economy at the start of the second quarter that could keep alive prospects of a rate rise later this year, capping gains in gold.

"Gold continues to trade in very tight ranges, in line with see-saw action in the DXY last week," Morgan Stanley said in a note.

"Momentum likely remains to the downside against medium-term expectations of a reversal in dollar weakness and continued selling in gold long positions."

Holdings in SPDR Gold Trust, the top gold-backed exchange-traded fund, saw the sharpest decline this year on Friday. Speculators had cut their bullish gold bets for the first time in four weeks in the week ended May 5.

Read MoreGold is beating stocks this year—Here's why

Bullion was also weighed down by steadier European equities, after China's latest cut in interest rates to bolster its economy.

The world's second-largest economy cut rates for the third time in six months on Sunday. Analysts forecast policymakers would relax reserve requirements and cut rates again in coming months.