On Monday gold prices struggled below the $1,100-level, as investors
looked ahead to the release of key data later in the session for further hints on when a U.S. rate increase will take place.
Comex gold futures for December delivery dropped $1.80, or 0.16%, to trade at $1,093.30 a troy ounce during European morning hours.
Futures fell to a five-and-a-half year low of $1,072.30 on July 24. Gold prices lost $79.50, or 6.72%, in July, the biggest monthly decline since June 2013.
In the recent weeks, the yellow metal has been under heavy selling pressure on expectations the Federal Reserve will raise interest rates for the first time in nine years in the coming months.
At its latest policy meeting, the central bank was more upbeat about the economy, leaving the door open for an interest-rate liftoff as early as September.
Later in the day, gold traders will await data on personal spending
in the U.S., while the Institute of Supply Management is expected to
release data on manufacturing activity.
Market players are also focusing on Friday's nonfarm payrolls report. According to market consensus, economists are expecting that 224,000 jobs were created in July. Bart Melek, head of commodity strategy at TD Securities commented that a reading above 200,000 could still be gold negative. A slightly weaker result might delay the Fed’s first rate liftoff until December instead of September, Melek added there is little difference between the two meetings.
Meanwhile, according to the Kitco News Wall Street vs Main Street Weekly Gold Survey, gold's short-term outlook looks mixed. The results signaled that the majority of retail investors continue to have a negative outlook on gold while most market professionals are neutral, expecting prices to bounce around current levels.
Analysts who are bearish highlighted the fact that gold is technically oversold and due for a bounce, but even then, gains would be limited. Peter Hug, global trading director at Kitco Metals, said that he could see gold prices rallying $20 next week as more traders cover their shorts, but any rally would be unsustainable.