Gold edged up to a two-week high and then retraced some gains on Monday, holding steady after Federal Reserve chair Janet Yellen said she still expected gradual U.S. rate increases.
On Monday, Yellen said interest rate hikes were likely because "positive economic forces have outweighed the negative" for the United States, though the weak jobs report bears watching. The precious metal had rallied 2.8 percent on Friday after surprisingly weak U.S. jobs data dampened expectations of rate hikes from the Fed.
"Chair Yellen's delicate dance of emphasizing the positives while acknowledging recent poor payrolls ... has kept gold and other markets largely unchanged, which may have been exactly the intention," said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York. "It keeps the July meeting in play and shifts focus into June's dot plot."
Rising rates lift the opportunity cost of holding the non-yielding metal, while boosting the dollar, in which gold is priced.
Spot gold was up 0.1 percent at $1,245.31 an ounce, after rising to its highest since May 24 at $1,248.40 an ounce.
U.S. gold futures for August delivery settled up 0.41 percent at $1,245.20 an ounce.
"The employment report didn't derail the Fed's desire to raise rates later this year, but given the volatility observed in the data recently, the path is still expected to be very gradual," said Royce Mendes, director and senior economist at CIBC Capital Markets in Toronto.
"We continue to expect a September move from the Fed." Wall Street's leading banks unanimously expect the Fed to leave rates unchanged this month, a Reuters poll showed prior to Yellen's speech.
Bullion, which has gained about 17 percent this year, had been under pressure in recent weeks as comments from senior U.S. central bank officials, including Yellen, boosted expectations of an imminent interest rate rise.
The dollar was slightly lower against a basket of major currencies while U.S. equities were firm.
"Although prices could still work a bit higher from here over the course of the month, we think values will be hard pressed to push above the $1,275 range over the course of June," said INTL FCStone analyst Edward Meir.
On Friday, holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose to the highest since October 2013.
Silver futures was up 0.67 percent at $16.48 an ounce, platinum futures was up 1.6 percent at $997.30 and palladium futures was 1.58 percent higher at $558.05.