Investing.com - Gold prices rose sharply during North America's session on Monday, as traders returned to the market to seek cheap valuations after futures suffered their worst one-week performance since September 2013.
Gold for December delivery on the Comex division of the New York Mercantile Exchange jumped by as much as 1.2% to a session peak of $1,266.75 a troy ounce. It was last at $1,262.05 by 9:35AM ET (13:35GMT), up $10.05, or 0.8%.
There will be no floor trading on the Comex on Monday because of the Columbus Day holiday in the U.S. All electronic transactions will be booked with Tuesday's trades for settlement.
The yellow metal ended last week with a loss of $64.60, or 4.9%, the worst one-week performance since mid-September 2013, amid growing expectations for a December rate hike by the Federal Reserve.
On Friday, gold prices slumped to $1,243.20, a level not seen since June 7, as disappointing U.S. employment data was seen as unlikely to alter the Federal Reserve’s plan for raising interest rates before the end of the year.
The U.S. economy added 156,000 jobs last month, down from a gain of 167,000 in August, while the unemployment rate ticked up to 5.0%, the Labor Department said Friday. Market analysts had expected 176,000 new jobs and the jobless rate to hold at 4.9%.
Despite the lackluster report, the slowdown was not expected to prevent the Federal Reserve from raising interest rates later this year. Markets are currently pricing in around a 70% chance of a rate hike at December's meeting, According to Investing.com's Fed Rate Monitor Tool.
Gold is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion.
The U.S. dollar index, which measures the greenback's value against a basket of six major currencies, was up 0.3% at 96.83 early Monday, within sight of the prior session's more than two-month high of 97.21.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
In the week ahead, market players will be turning their attention to Wednesday’s minutes of the Federal Reserve’s September policy meeting for fresh clues on the timing of the next U.S. rate hike.
U.S. retail sales data will also be in the spotlight, as investors attempt to gauge if the world's largest economy is strong enough to withstand an increase in borrowing costs before the end of the year.
In addition, there are a handful of Fed speakers on tap, including Chair Janet Yellen, as traders look for more clues on the likelihood of a December rate hike.
The timing of a Fed rate hike has been a constant source of debate in the markets in recent months.