By Jan Harvey
LONDON (Reuters) - Gold fell more than 1 percent on Monday after failing to break back above $1,300 in the wake of a weaker than expected U.S. jobs report on Friday, with a firmer dollar prompting some investors to cash in gains in the metal.
Spot gold was down 1.2 percent at $1,273.46 an ounce at 1150 GMT, while U.S. gold futures for June delivery were down $18.90 at $1,275.10. That erased the 0.8 percent gain gold made on Friday following non-farm payrolls data.
Gold snapped four days of losses after the report, which showed the U.S. economy added the fewest jobs in seven months in April, leaving some economists anticipating only one interest rate hike from the Federal Reserve this year.
But its failure to capitalise further on the data may have disappointed gold bulls, ABN Amro analyst Georgette Boele said.
"The dollar has started to recover somewhat," she added. "The reason why the dollar was not aggressively sold off after the data is also making investors somewhat nervous about the gold positioning."
The dollar index, which hit a 16-month low last week, rose 0.2 percent on Monday, having shown a fairly muted reaction to Friday's mixed U.S. jobs report.
Helping the dollar rebound, New York Federal Reserve President William Dudley said two U.S. rate hikes this year were still a "reasonable expectation."
Chicago Fed President Charles Evans said on Monday the U.S. economy's fundamentals are solid and growth this year should pick up to around 2.5 percent, though he said the Fed's 'wait and see' approach to rates was appropriate.
Rising rates tend to weigh on gold, as they lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced. Gold has rallied 20 percent this year as expectations for a near-term Fed hike faded.
Hedge funds and money managers raised their net long positions in COMEX gold contracts in the week to May 3, U.S. Commodity Futures Trading Commission data showed on Friday.
"The rise in the gold price to above the $1,300 mark was driven to a large extent by speculation," Commerzbank said in a note. "Net long positions are now only marginally below the record high they achieved at that time."
China's gold reserves stood at 58.14 million fine troy ounces at the end of April, up from 57.79 million fine troy ounces at the end of March, the central bank said.
Silver was down 1 percent at $17.28 an ounce, while platinum was down 1.2 percent at $1,062 and palladium was 1.7 percent lower at $593.45 an ounce.
(Additional reporting by Melanie Burton in Melbourne; editing by Susan Thomas)
