LONDON: Gold rose on Monday, rebounding from a three-week low hit in the previous session, as European equities suffered from soft Chinese trade data coupled with worries about Greece.
Spot gold gained 0.4 per cent to $1,238.46 an ounce by 1250 GMT. The metal posted its biggest one-day loss since December 2013 on Friday, hitting $1,228.25, as the dollar rallied after strong US payrolls data.
US gold for April delivery edged up 0.3 per cent to $1,238.80 an ounce.
“There is a lot of volatility in the market, triggered by how elements of the macro environment interact: you have the US interest rate hike talk but also worries over Greece. Both are likely to continue over the next few weeks,” Societe Generale analyst Robin Bhar said.
European shares tracked losses on Wall Street and in Asia, with disappointing Chinese trade data further raising concerns about growth in the world’s second-biggest economy.
Gold was also helped as the dollar gave back some of its gains made on Friday after data showed US jobs growth rose solidly in January and wages rebounded, an indication of economic strength that put a midyear interest rate increase from the Federal Reserve back on the table.
The US central bank has held benchmark borrowing costs near zero since December 2008. An increase in rates should further boost the dollar, in turn denting demand for gold, a non-interest-bearing asset.
Investors were also monitoring news from Greece after the new government reaffirmed its rejection of an international bailout programme.
Hedge funds and money managers cut their bullish bets on gold and silver futures and options for the first time in six weeks during the week to February 3, US Commodity Futures Trading Commission data showed on Friday.
In the physical markets, Chinese premiums rose to $4-$5 an ounce on Monday, from less than $4 in the previous session, as last week’s sharp decline in prices attracted some buyers.
Chinese consumers typically buy gold for gift-giving ahead of the Lunar New Year holiday on Feb. 19-20, but buying is likely to slow during and just before the break, traders said.
“With Chinese New Year nearly here, the buying activity would have mostly concluded so don’t expect much seasonal support from the Chinese at this point,” Phillip Futures analyst Howie Lee said.
Spot silver was up 1.3 per cent at $16.89 an ounce.
