Gold was flat on Monday after Friday’s strong US non-farm payroll data bolstered the case for a Federal Reserve interest rate rise next week.
Typically, strong data to support such a hike should lead to a fall in gold prices as higher interest rates would weigh on non-interest-paying assets such as gold by increasing the opportunity cost of holding it.
But investors on Friday chose to cover their shorts.
Speculators have been holding record short positions on US gold futures market Comex, according to reports, looking to cover in case of a fall in US stocks.
The metal gained US$24 on Friday, taking gold to its highest level in three weeks.
But Mike van Dulken, at Accendo Markets, isn’t convinced it can hold the gains for long.
He said: "Since Friday’s impressive rally looks to have been the result of a short squeeze, a bullish pattern should be viewed with caution."
The metal slipped back US$9 on Monday to US$1,077 per ounce.
Elsewhere, silver was 1% lower to US$14.41 per ounce while platinum also lost US$9, or 1% to US$870.
Randgold Resources down 68p to 4,221p
Fresnillo down 8p to 694p
Anglo American down 3p to 372p.