Gold gained on Monday as buyers took advantage of cheaper prices after the metal dropped to a one-month low at the end of last week, although safe-haven demand remained subdued as a jump in US employment boosted hopes of a swift economic recovery.
Spot gold was 0.7 per cent higher at $1,696.37 per ounce by 0807 GMT, having dropped as much as 2.4 per cent on Friday after data showed US nonfarm payrolls increased by more than 2.5 million jobs last month - compared with consensus estimates for a fall of 8 million jobs.
US gold futures gained 1 per cent to $1,700.30.
"The narrative around the unemployment data presents a whole smorgasbord of risks to gold going forward, and the upside is going to be quite limited," said Stephen Innes, chief market strategist at financial services firm AxiCorp.
"Gold is going to struggle to clear the $1,700 level again."
The strong jobs data bolstered demand for risky assets like stocks, which advanced on Monday.
Market participants are now waiting for the US Federal Reserve's two-day policy meeting ending on Wednesday, though they have stopped pricing in the possibility of negative rates after the surprise recovery in employment.
"Gold and
silver continued to recover this morning as some physical/retail bargain hunters had some pent up demand at the lower levels," MKS PAMP said in a note.
However, given the increase in US jobs and the likelihood that this trend will be replicated in other countries, there is further scope for more immediate downside, MKS added.
Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, dipped 0.4 per cent on Friday. Speculators also cut their bullish positions in COMEX gold in the week to June 2.
Elsewhere, silver was up 1.8 per cent at $17.68 per ounce. Palladium fell 1.3 per cent to $1,928.66, and platinum declined 0.6 per cent to $830.78.