Gold for December delivery was recently down 0.3% at $1,340.80 a troy ounce on the Comex division of the New York Mercantile Exchange.
The precious metal sustained its largest one-day loss since late May on Friday, following the announcement that the U.S. added 255,000 jobs in July that also boosted the possibility that the Federal Reserve could raise benchmark interest rates as soon as September. The nonfarm employment figure exceeded analysts' expectations of 179,000 new jobs.
"It's a classic narrative, but as employment and bond yields are improving [in the U.S.], it's more expensive to hold gold," said Bernard Dahdah, a precious metals analyst at Natixis.
Higher interest rates tend to weigh on the price of gold, which doesn't accrue interest and struggles to compete with yield-bearing investments.
The probability of the Fed raising rates this year has increased to 47%, Commerzbank said in a note to clients, citing Fed Fund Futures.