Gold inches up on weak jobs data, stimulus hopes

Gold edged higher on Monday after softer-than-expected US nonfarm payroll data eased fears of an imminent tapering of the Federal Reserve's stimulus measures.

Also read: 4 reasons why hedge funds are selling gold Gold had fallen below USD 1,300 last week after strong US gross domestic product and factory activity data that reduced its investment-hedge appeal. However, it rebounded after data showed US employers slowed their pace of hiring. Spot gold was trading 0.2 percent higher at USD 1,314.26 an ounce by 0656 GMT, while US gold gained about USD 3 to USD 1,313.90. "These markets are very much driven in the immediate future by the data that gives us an idea as to when the tapering is going to start taking effect. And gold being very much the most sensitive to that," said Mark Keenan, cross-commodity research strategist at Societe Generale in Singapore. Gold, seen as a hedge against inflation, had gained in recent years as the global economy took a hit and central banks acted to boost their economies. Prices touched an all-time high of USD 1,920.30 in 2011. In recent weeks, the Fed has said that it would begin tapering its USD 85 billion monthly bond purchases if the US economic recovery retained momentum, prompting investors to closely monitor housing and jobs data. "The tapering is very much on the horizon. We see it this year," said Keenan. Hedge funds and money managers trimmed their gold net longs and raised their bullish position in silver futures and options, a report by the Commodity Futures Trading Commission showed on Friday. Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.26 percent to 918.64 tonnes on Friday touching fresh four-year lows. "The outlook is bearish for gold, and we expect a test of the major low at USD 1,180, to target USD 1,156," ScotiaMocatta analysts wrote in a note. Gold hit a near three-year low of USD 1,180 on June 28. "This is the 61.8 percent retracement of the 2008 to 2011 uptrend, and should be a major support level for gold."