[SINGAPORE] Gold was little changed above US$1,200 an ounce on Monday with a softer dollar providing support for the safe-haven metal, but a lack of robust physical demand and uncertainty over the timing of a US interest rate hike kept investors on edge.
Spot gold was flat at US$1,203.66 an ounce by 0341 GMT, after gaining 0.6 per cent on Friday.
Activity was subdued with the metal trading in a US$3.30 range, the smallest intraday trading range in over three months.
"Gold is stuck near US$1,200 as there is more interest in equity, oil and currency markets," said a precious metals trader in Sydney. "If the dollar drops further, gold could probably go up to US$1,220." The dollar got off to a quiet start on Monday, having suffered a near 2 per cent drop last week as underwhelming US data prompted the market to trim long positions.
US inflation data on Friday that indicated the Fed was on course to start raising interest rates this year failed to boost the greenback.
The Fed's policy meet later this month will be eyed for stronger clues about the timing of a rate hike.
An early rate hike could diminish demand for bullion, a non-interest-paying asset.
The bullion trader also noted that there has been no significant uptick in physical demand from top consuming region Asia.
Sluggishness in China, the world's second biggest bullion consumer, in particular was a concern given central bank easing measures over the weekend.
China's central bank on Sunday cut the amount of cash that banks must hold as reserves, to help spur bank lending and combat slowing growth.
Easing measures would have typically boosted demand for gold. However, Chinese prices were at a premium of about US$1 an ounce to the global benchmark, unchanged from Friday.
"We are not seeing any big demand from the Chinese whatsoever," the trader said.
In India, the top bullion consumer, consumers were holding back purchases ahead of Akshay Tritiya, a key gold buying festival on Tuesday.
Traders were also keeping an eye on equity markets. Asian shares dipped early on Monday after a weak performance on Wall Street.
Further weakness in equities could prompt investors to channel money into gold, seen as a safe-haven.