That left traders betting that the Federal Reserve would press ahead with lifting US interest rates this year, potentially cooling interest in gold because it increases the opportunity cost of holding non-yielding assets such as bullion.
Spot gold was down 0.1 per cent at $ 1,313.03 an ounce by 0930 GMT, having touched its highest since April 30 at $ 1,318.85. US gold futures for June delivery eased by 0.1 per cent to $ 1,314.
The market was thinned by a national holiday in the United Kingdom, which closed trading desks in London.
The dollar index rose back towards Friday’s peak for the year on Monday after US jobs and wages data did little to alter perceptions of strength in the US economy and consequently expectations for more Fed rate hikes.
Meanwhile, a surprise drop in German industrial orders served as a reminder that softer economic data could encourage the European Central Bank to delay the unwinding of its extraordinary stimulus measures.
Commerzbank analyst Carsten Fritsch said that gold was still primarily driven by the dollar and the widening interest rate differential between the United State and Europe. “This all boosts the US dollar and weighs on gold,” he said.
Investors are therefore tempering bets on higher gold prices, he said. “Spec net longs are at the lowest since July 2017. (There has been a) massive reduction in the last few trading weeks, so most speculative investors have thrown in the towel already.”
Speculators cut their net long positions in COMEX gold by 62,378 contracts to 51,985 contracts in the week to May 1, data from the US Commodity Futures Trading Commission (CFTC) showed on Friday.
Holdings of the world’s largest gold-backed exchange-traded fund, New York-based SPDR Gold Shares , fell 0.17 per cent to 864.13 tonnes on Friday.
Spot silver was down 0.2 per cent at $ 16.46 an ounce, while palladium gained 1.1 per cent to $ 978.
Platinum was 0.9 per cent higher at $ 914.50 an ounce, having earlier hit its highest since April 25 at $ 918.70. Friday’s positioning data from the CFTC suggests the metal may be due a bounce, analysts said.
“On platinum, money managers increased their short position by 8,813 contracts taking concentration of speculative short open interest (money manager short position as a per centage of total open interest) to 41.9 per cent, the highest level since July 2017,” Societe Generale said in a note.
“With prices near the bottom of the recent one-year range, platinum is now in the oversold box.”