* Downbeat U.S. payrolls data helps gold rebound
* Chinese buyers return from Golden Week holiday
* GRAPHIC-2016 asset returns: reut.rs/1WAiOSC
By Jan Harvey
LONDON, Oct 10 Gold rebounded on Monday from its
biggest weekly drop since November after downbeat U.S. payrolls
data on Friday dampened speculation of a near-term interest rate
hike, and as Chinese buyers returned after the Golden Week
The metal slid 4.5 percent last week, touching a four-month
low of $1,241.20 an ounce on Friday, after a break of support at
$1,300 unleashed a wave of technically-driven selling.
It has since recovered as traders weigh up the timing of an
U.S. interest rate hike this year after payrolls data on Friday
came in softer than expected, bolstering expectations that hikes
would only be gradual.
Spot gold was up 0.3 percent at $1,260.64 an ounce at
1210 GMT, while U.S. gold futures for December delivery
were up $10.70 an ounce at $1,262.60.
"Partly this is a reaction to the rather disappointing
payrolls data on Friday, which has forced a readjustment of rate
rise expectations," Mitsubishi analyst Jonathan Butler said.
"There is also a feeling that the sell-off last week was rather
"Also of course we have a return of the Chinese physical
market from a week-long holiday last week," he said. "The market
was crucially lacking that element of physical support that we
would normally expect to at least keep a floor under prices."
Hedge funds and money managers cut their net long positions
in COMEX gold contracts to four-month lows in the week to Oct.
4, as prices tumbled, U.S. government data showed.
However, the world's largest gold-backed exchange-traded
fund, New York-listed SPDR Gold Shares, reported the
biggest one-day rise in its holdings since early July on Friday,
of 11.3 tonnes.
Gains in gold were capped on Monday by a perception that
Democrat Hillary Clinton had won out over Republican Donald
Trump in the second U.S. presidential debate overnight. A Trump
victory would have been seen as beneficial for gold, analysts
said, as it would increase uncertainty.
"The metal drifted lower throughout much of the debate, with
many commentators affirming Clinton had taken the upper hand,"
MKS said in a note.
Financial markets saw less chance of a Trump victory amid a
scandal over vulgar comments he made about women.
Among other precious metals, silver was up 1.2
percent at $17.72 an ounce. It fell 8.5 percent last week, its
biggest weekly drop in more than three years.
Platinum was 0.6 percent higher at $970.20 an ounce,
having touched $946.40 on Friday, its lowest since April 7.
Palladium snapped a five session fall, and was 0.6
percent higher at $668.90 an ounce.
(Additional reporting by Swati Verma and Vijaykumar Vedala in
Bengaluru; Editing by Ruth Pitchford and Louise Heavens)