Investing.com - Gold prices struggled near the lowest level in three months on Monday, as investors slashed holdings of the precious metal amid expectations the Federal Reserve will raise interest rates at its next meeting in December.
Gold for December delivery on the Comex division of the New York Mercantile Exchange tacked on $1.20, or 0.11%, to trade at $1,088.80 a troy ounce during U.S. morning hours.
On Friday, gold prices fell to $1,084.50, the lowest since August 7, after data showing the U.S. economy created more jobs than expected in October bolstered expectations for a rate hike next month.
The Labor Department reported that the U.S. economy added 271,000 jobs last month, the largest increase since December, while the unemployment rate inched down to 5.0%, the lowest since April 2008.
Analysts had expected the economy to create 180,000 jobs in October, while the unemployment rate was forecast to hold steady at 5.1%.
The robust data was seen as paving the way for the Fed to raise interest rates at its December meeting.
The U.S. dollar held near seven-month highs against a basket of six other major currencies on Monday amid expectations for tighter monetary policy in the U.S. in the coming months.
Dollar-priced commodities become more expensive to investors holding other currencies when the greenback gains.
Investors now looked ahead to key U.S. data later in the week for further indications on the strength of the economy and the likelihood of a near-term rate hike.
The U.S. is slated to release data on retail sales, producer prices and consumer sentiment on Friday.
The timing of a Fed rate hike has been a constant source of debate in the markets in recent months. The U.S. central bank has one more scheduled policy meeting before the end of the year in mid-December.
Gold had rallied in October as concerns over a global economic slowdown led by China and its impact on U.S. growth prospects had prompted market participants to push back expectations for a rate increase to March 2016.
But hawkish comments from Fed officials last week forced market players to readjust expectations for higher interest rates to as early as December, triggering a sell-off in the bullion market.
Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.
Elsewhere in metals trading, copper slumped to a five-week low on Monday, after latest trade figures out of China added to concerns over the health of the world's second-biggest economy.
Data released Sunday revealed that Chinese exports slumped 6.9% from a year earlier in October, worse than forecasts for a decline of 3.0%, while imports plunged 18.8%, compared to expectations for a drop of 16.0%.
That left China with a record-high trade surplus of $61.6 billion last month, up from $60.3 billion in September.
China’s copper arrivals in October fell 8.7% from a month earlier to 420,000 metric tons, underlining worries over weakening demand prospects from the Asian nation.
The disappointing data reinforced the view that the economy remains in the midst of a gradual slowdown which will require policymakers in Beijing to roll out more measures to boost growth in coming months.
Market players now looked ahead to data on Chinese consumer and producer price inflation on Tuesday for further hints on the strength of the world's second-largest economy.
The report is expected to show that consumer prices rose 1.5% last month, compared to a reading of 1.6% in September, while producer prices are forecast to fall by 5.8%, which would be the 42nd straight monthly decline.
On Wednesday, the Asian nation is due to publish reports on industrial production, retail sales and fixed asset investment for October.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.