Aug 2 (Reuters) - Gold prices edged lower on Monday as the dollar held steady, with traders eyeing monthly U.S. jobs data to gauge the health of the labour market. FUNDAMENTALS * Spot gold fell 0.2% to $1,809.21 per ounce by 0137 GMT. Prices retreated from a two-week peak in the previous session after the dollar recovered. * However, the greenback was down 0.8% last week, its worst weekly performance in over two months. * U.S. gold futures fell 0.1% to $1,814.90. * The Federal Reserve should start reducing its $120 billion in monthly bond purchases this fall and cut them “fairly rapidly” so the program ends in the first months of 2022 and paves the way for an interest rate increase that year if needed, St. Louis Fed president James Bullard said on Friday. * Bullard’s comments came after Chair Jerome Powell’s reassurance that a rate hike was not on the cards for the time being. * China’s factory activity expanded in July at the slowest pace in 17 months amid higher raw material costs and extreme weather, adding to concerns about a slowdown in the world’s second-biggest economy. * Top U.S. infectious disease expert Dr. Anthony Fauci warned on Sunday “things are going to get worse” with a rise in virus cases, mostly among the unvaccinated. * Asia saw a jump in COVID-19 cases on Saturday, mostly driven by the highly transmissible Delta variant of the disease. * Physical gold demand was subdued in India last week as rising prices discouraged retail purchases, while top consumer China saw some safety buying, though jewellery sales were dull. * Speculators cut their net-long positions in COMEX gold and silver in the week ended July 27, data from the U.S. Commodity Futures Trading Commission showed. * Silver fell 0.4% to $25.37 per ounce, palladium rose 0.1% to $2,664.34, while platinum gained 0.6% to $1,054.72. DATA/EVENTS (GMT) 0800 EU Markit Mfg Final PMI 0830 UK Markit/CIPS Mfg PMI Final 1345 US Markit Mfg PMI Final 1400 US ISM Manufacturing PMI Reporting by Eileen Soreng in Bengaluru; Editing by Ramakrishnan M. Our Standards: The Thomson Reuters Trust Principles.