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Gold steadies after US payrolls, rate hike fears

Gold
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Gold steadied after hitting a one-week low on Monday, adding to a near 2 percent loss sustained in the previous session on renewed expectations of a U.S. interest rate hike after stronger-than-expected payrolls data.

U.S. employment rose more than expected for the second month in a row in July and wages picked up, bolstering expectations of faster economic growth, and raising the probability of an interest rate increase this year.

Spot gold was down 0.06 percent at $1,335.88 an ounce, after dipping to $1,329.58, the lowest since July 27.

U.S. gold for December delivery was nearly flat at $1,356.90 an ounce. Gold futures settled at $1341.30 on Monday.

"Gold is under pressure this morning. It's still a reaction after Friday's strong U.S. jobs report," ABN AMRO commodity strategist Georgette Boele said.

"It's on the defensive because the market is expecting more of a rate hike after Friday."

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.

U.S. stocks, European shares and the dollar gained after the U.S. job data.

There was a mix of short covering and bargain hunting in Asian trading hours on Monday before sellers wrestled back control, MKS PAMP Group trader Sam Laughlin said in a note.

Speculators added net longs in gold futures for the first time in four weeks in the week to Aug. 2, though they remained below last month's highest level in more than two years.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose by 7.1 tonnes to 980.3 tonnes on Friday, its biggest one-day inflow since late June.

"Gold remains overbought ... evidenced by large net long positions in Comex and ETFs, and we feel is vulnerable to further downside in the short term," MKS said in a note.

Among other precious metals, spot silver was up 0.46 percent at $19.75 an ounce after hitting a near two-week low at $19.56. It fell 3 percent on Friday.

Hedge funds and money managers decreased their net long position in COMEX silver contracts for the first time in two months in the week to Aug. 2, taking it off the previous week's record high, data showed on Friday.

Spot platinum was 0.68 percent higher at $1,149.75, while spot palladium was down 0.11 percent at $693.25.