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Gold snapped a three-day losing streak on Monday as equities took a hit from weak Chinese economic data, but the metal wasn't too far from a six-week low as investors continued to speculate on when the Federal Reserve might raise US interest rates.
Spot gold ticked up 0.4 per cent to $1,183.20 an ounce by 0340 GMT, up from a six-week low of $1,170.20 reached on Friday.
Asian share markets stumbled on Monday after disappointing news on Chinese manufacturing underlined the need for further policy stimulus in the world's second-biggest economy, boosting demand for safe-haven bullion.
The uptick in gold follows sharp losses last week after the Fed said it saw the recent slowdown in the US economy as transitory and was not ruling out an interest rate rise this year.
Investors will be monitoring US economic data due this week, including the nonfarm payrolls report for April due on Friday.
Soft data could prompt the Fed to delay a rate rise and boost non-interest-paying gold.
“Gold has proven one time too many that it prefers to stick to $1,200 amid large fluctuations and I am inclined to believe that the precious metal may slowly edge back to that level just before Friday's nonfarm payrolls,” said Howie Lee, an analyst at Phillip Futures.
However, others were a bit more cautious, citing weak chart readings. Gold will trade in the $1,140-$1,225 range in May due to deteriorating technicals, despite softness in the dollar and sluggishness in the US economy, said INTL FCStone analyst Edward Meir.
Recent US economic figures have been mixed, with data on Friday showing a rise in consumer sentiment but weakness in manufacturing and construction. The sluggishness in the economy has led many to believe the Fed won't raise rates at its June meeting.
They expect the US central bank to wait until December before raising rates for the first time since 2006. However, caution prevailed as two top US central bankers said on Friday the Fed could still raise interest rates as soon as June if economic data strengthens as expected from a dismal first quarter.
In the physical markets, gold demand picked up after the metal's sharp losses last week.
Premiums on the Shanghai Gold Exchange, a physical platform in No. 2 consumer China, ticked up to $3-$4 on Monday from about $2 last week.
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