Gold inched higher on Monday, extending gains from the previous session after better-than-expected US employment data lent support to risk appetite, weighing on the dollar.
The dollar fell to a one-month low against a basket of currencies, helping gold to gain slightly, although the overall sentiment for bullion remained mixed amid a lack of clarity on the macroeconomic policy front.
US employers hired the most workers in five months in July, but an increase in the jobless rate to 8.3 percent kept the prospect of further monetary stimulus from the Federal Reserve on the table.
"Market participants are now betting on Fed action at next month's FOMC (Federal Open Market Committee) meeting as the unemployment rate ticked up, even though the payrolls figure beat expectations," said Chen Min, an analyst at Jinrui Futures in the southern Chinese city of Shenzhen.
Spot gold inched up 0.2 percent to $1,605.99 per ounce by 0646 GMT, extending the previous session's 0.9 percent rise.
The U.S. gold futures contract for December delivery was little changed at $1,609.40.
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Debt-laden euro zone nations will be in focus this week, after both the European Central Bank and the Fed disappointed investors by remaining ambiguous on plans for further stimulus measures.
Spanish Prime Minister Mariano Rajoy inched closer on Friday to asking for an EU bailout for his country, but said he needed first to know what conditions would be attached and what form the rescue would take.
"The ECB is unlikely to make a bold move this week, and we'll see gold settle in the wait-and-see game again," said Chen of Jinrui Futures.
Hedge funds and money managers raised their net long positions in U.S. gold and silver futures and options by 35 percent in the week to July 31, as price gains based on speculation of more Federal Reserve stimulus prompted speculators to boost their bullish bets.
Gold shipments from Hong Kong to mainland China fell 10 percent in June from the previous month to just below 68 tonnes, while gold flow from China to Hong Kong declined 9 percent to about 27 tonnes, Hong Kong's official trade data showed.
(Editing by Miral Fahmy)