Gold rebounded from a two-week low on Monday after oil recovered from last week's near-record decline, but recession worries could limit investors' appetite for risky assets and keep bullion trade in a tight range.
Buying from Japanese speculators resurfaced after gold had posted its biggest weekly fall in seven weeks as a dismal US jobs report on Friday sparked selling across the board. Other precious metals also tracked gold higher.
Gold was at USD767.50 an ounce, up USD12.90 from New York's notional close on Friday, when it fell as low as USD740.40. The metal was struggling to sustain gains after a rally to a six-week high of USD830.10 in October was met by heavy selling.
"Gold is odd. It doesn't seem to be benefiting from any safe-haven flows at the moment," said David Moore, commodities strategist at Commonwealth Bank of Australia in Sydney.
"I suspect that at some point, we might see gold recover a little bit because there's a potential for some diversification back into gold."
Oil jumped 6 percent to more than USD43 a barrel, clawing back a share of the near-record decline last week, with the help of strong equities and Saudi Arabia's move to cut January oil supplies a bit more deeply for a few Asian refiners.
Oil shed a quarter of its value last week; the sharpest weekly fall since January 1991.
Worries about rising inflation helped propel gold to a record high of USD1,030.80 in March but trading has since been volatile. Gold hit a 13-month low of USD680.80 in October, when a sell-off in equities forced investors to cash in to cover losses.
Recent strength in the yen against the US dollar spurred buying from Japanese investors but gold prices are still at the mercy of movements in stock markets and oil, said Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo.
"The gold price will be moving in a small range of USD750 to USD800. As long as the oil price is not so strong and stock prices also fluctuate, gold will be moving in the same range," said Sonoda.
But the volatility does not seem to have scared off retail investors, with the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, saying it held757.89 tonnes of gold as of December 5, down just 0.23 tonnes from November 26. The euro edged up to USD1.2793 after falling in New York on Friday, when data showed US employers cut payrolls by a much larger-than-expected 533,000 in November, the sharpest monthly loss since 1974. Markets were expecting 340,000 job losses, Reuters data showed.
The Nikkei climbed 5.2 percent on Monday to its highest close in a week on hopes for economic stimulus packages being enacted around the world. Platinum, used in car catalytic converters, was trading at USD809.00 an ounce, up USD21.00 on speculative buying in Japan, but uncertainties prevailed as the White House and congressional negotiators sought to remove differences over an emergency rescue for the auto industry.
"Many people think the problems faced by General Motors will be settled. The reality is quite different. Even if the US government supplies some money, it's not going to solve any problems," said Sonoda of Daiichi Commodities.
New York gold futures added USD16.8 an ounce to USD769.0 in electronic trade.
