By Manolo Serapio Jr
MANILA (Reuters) - Gold struggled on Monday to recover from last week's losses, even in the face of a softer dollar, amid concern that the Federal Reserve is on course to raise interest rates this year despite recent market turmoil.
But bullion is still on track to end August higher after scaling a seven-week peak during the month as worries over a slowing Chinese economy sparked safe-haven bids. That safe-haven draw proved fleeting on growing signs of a near-term increase in U.S. interest rates.
Fed Vice Chairman Stanley Fischer, speaking at the central bank's conference in Jackson Hole, Wyoming, on Friday said recent volatility in global markets could ease and possibly pave the way for a rate hike.
"We think gold will likely come under further pressure as we near the Fed decision, as investors coalesce around the notion that the central bank will indeed move" and lift interest rates, said INTL FCStone analyst Edward Meir.
Spot gold was flat at $1,133.75 an ounce by 0630 GMT in quiet trade with London off on a bank holiday. Gold dropped more than 2 percent last week in its steepest decline in five weeks. For the month, the metal was up 3.5 percent.
Bullion was stuck in tight ranges even as the dollar retreated versus a basket of currencies.
U.S. gold for December delivery was little changed at $1,133.40 an ounce.
Fed policymakers meet next on Sept. 16-17 and some analysts, like Meir, are sticking with their view that the U.S. central bank could still hike rates in September despite the recent slump in global equities courtesy of deepening worries over China, the world's No. 2 economy.
Meir has tipped a 25-basis point increase in U.S. interest rates, suggesting more downside risk for non-interest yielding gold in the short term.
But Mizuho Bank senior economist Vishnu Varathan thinks a September rate hike "is far from a done deal unless China markets stabilize convincingly amid firmer data, and/or U.S. data gain considerable strength."
That puts considerable focus on the U.S. August nonfarm payrolls due on Friday, with an upbeat number possibly increasing believers to a September rate hike.
In the near term, China stocks dropped in what could foreshadow another rough week for equities, potentially boosting haven demand for the metal.Still, hedge funds and money managers hiked bullish bets in COMEX gold and raised their net long position in silver futures and options in the week ended Aug. 25, U.S. Commodity Futures Trading Commission data showed.
Spot silver slipped by 0.5 percent to $14.5 an ounce, while platinum fell 1.5 percent to $1,001. Palladium trimmed earlier losses to $583, down 0.5 percent.
(Reporting by Manolo Serapio Jr. Additional reporting by Melanie Burton in Melbourne; Editing by Joseph Radford and Biju Dwarakanath)
