US gold was little changed at US$1,740.30, holding onto its 3 percent gain from last week
Gold inched up on Monday towards a 6-1/2-month high hit in the previous session, buoyed by expectations for the Federal Reserve to take imminent easing action after the latest data painted a bleak picture of the US job market.
Friday's data showed US job growth slowed significantly in August, fanning hopes that the Fed will announce another round of quantitative easing, also known as QE3, at this week's policy meeting.
Easing monetary policy leads to expectations of rising inflation and drives investors to bullion, seen as a good hedge against rising prices.
"The possibility of QE3 has definitely grown, but the risk is also climbing as if we were about to draw the last card at a poker game," said a Shanghai-based trader.
"If QE3 is announced, gold is very likely to break above US$1,800. But before that we may see some fluctuation in prices."
Spot gold edged up 0.1 percent to US$1,737.63 an ounce by 0311 GMT, after rising to US$1,741.30 the session before, its highest since February 29.
US gold was little changed at US$1,740.30, holding onto its 3 percent gain from last week.
Technical analysis showed a bullish picture for spot gold, suggesting prices may rise towards $1,786 during the day, said Reuters market analyst Wang Tao.
After months of dull trading, the precious metals market sprang into life in August as central banks around the world, especially the Fed and European Central Bank, signalled that they would launch more stimulus to aid frail economies.
Spot gold has jumped 7 percent over the past three weeks, while cash silver soared 20 percent during the period.
"Gold has been in the overbought territory since last week, and we may see some profit-taking as the volatile investment
demand has been the main factor behind the recent rally," said Lynette Tan, an analyst at Phillip Futures in Singapore.
Speculators raised net bullish bets on US gold futures and options rose to a six-month high 144,775 contracts in the week ended September 4, data from the US Commodity Futures Trading Commission.
Investors piled into gold-backed exchange-traded funds as well. Holdings of gold ETFs rose to a fresh record high of 72.125m ounces on Friday.
In other news, Hong Kong's net gold exports to China in July rose 13 percent on the month to nearly 46 tonnes, the second-highest level this year after April, signalling robust demand from the country that is poised to overtake India as the world's top gold consumer this year.