Singapore - Gold held steady on Monday as bargain hunting helped the metal defy pressure from firming stock markets and shrug off growing optimism the US economy would not fall back into recession.
But bullion was likely to trade in a tight $10 range, with US investors away for the Labour Day holiday, while silver was hardly changed after rallying to its strongest since March 2008 on Friday as investors booked profits and ETF holdings dropped.
Spot gold added 26 cents to $1 248.30 an ounce by 05:34 GMT, having fallen as low as $1 235.70 on Friday on a US labour market report that was much less weak than feared. Gold struck a lifetime high around $1 264 an ounce in late June.
"I am actually just expecting gold to trade between $1 240 and $1 250 region. It's just a bit of a range bound between these two levels," said Ong Yi Ling, investment analyst at Phillip Futures in Singapore.
"I would still expect gold to be supported as it was able to rebound quite sharply from its session low of about $1 235 all the way to $1 245 level. The ISM non-manufacturing data was actually not as good."
US gold futures for December delivery was barely moved at $1 250.3 an ounce.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings slipped to 1 294.442 tonnes by September 3 from 1 294.908 tonnes on September 2. The holdings surged to a record 1 320.436 tonnes on June 29.
Asian stocks touched one-month highs on Monday after the latest US jobs data soothed investors worried about a second recession in the world's biggest economy.
US non-farm payrolls fell 54 000, the Labour Department said, a much smaller drop than the predicted 100 000. The US non-manufacturing sector grew in August for an eighth straight month, but at a slower pace than July and at a rate that was below expectations.
"There's a bit of buying at lower prices. It looks like everybody is still slightly bullish on gold because the US economy is only recovering very slowly," said a dealer in Hong Kong.
"Silver lags gold, so it's worth buying. There's a selling in silver today but it's not aggressive," said the dealer, adding that the metal had attracted buying from the industrial sector last week.
The ratio of gold to silver - or how many ounces of silver are needed to buy an ounce of gold - held near its lowest level since April at around 62.
The world's largest silver-backed exchange-traded fund, the iShares Silver Trust, said its holdings dropped to 9 276.73 tonnes by September 3 from 9 280.40 tonnes on September 1.
In currencies, the dollar was on the defensive after firm US payrolls data last week eased market anxiety over chances of a double-dip recession and boosted demand for the euro and growth-leveraged currencies.
Oil fell for a second straight session as the end of the driving season in the United States and record petroleum stockpiles there fuelled doubt that supplies would drain in the face of tepid economic growth.