Gold held firm near an all-time high on Monday, inching closer to a key $3,600 level, bolstered by mounting expectations of a U.S. Federal Reserve rate cut this month following a weaker-than-expected jobs report last week.

Spot gold was flat at $3,586.81 per ounce, as of 0121 GMT. Bullion rose to a record high of $3,599.89 on Friday.

U.S. gold futures for December delivery fell 0.7% to $3,626.10.

"The main driver is U.S. jobs data and the expectations now that the Fed could cut by 50 basis points in September. It's a marginal chance but a material shift from before the jobs figures," Capital.com financial market analyst Kyle Rodda said.

"Basically...all of the tailwinds are blowing for gold at the moment and notwithstanding an inflation shock this week, we will make a good test of $3,600."

U.S. job growth weakened sharply in August, and the unemployment rate increased to a nearly four-year high of 4.3%, confirming that labor market conditions were softening and sealing the case for a Fed rate cut next week.

Traders have fully priced in a 25-bp cut this month, with an 8% chance of a jumbo 50-bp rate cut, according to the CME FedWatch tool.

Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies.

Focus now shifts to the U.S. inflation report on Thursday that could offer more clarity on the size of the Fed's expected rate cut.

Bullion has surged 37% so far this year after a 27% gain in 2024, driven by the dollar's weakness, central bank buying, a softening monetary policy backdrop, and wider geopolitical and economic uncertainty.

China's central bank added gold to its reserves in August, extending purchases of bullion into a 10th straight month.

Meanwhile, gold speculators raised net long positions by 20,740 contracts to 168,862 in the week ended September 2.

Elsewhere, spot silver fell 0.5% to $40.75 per ounce. Platinum rose 0.1% to $1,374.35, and palladium was flat at $1,109.71.

Source: Reuters