LONDON: Gold pared losses on Monday as weak US retail sales data cut into the dollar�s gains and stoked speculation more measures may be needed to boost US growth, though it stayed under pressure as concerns over the euro zone crisis hurt the single currency.
Investors largely stuck to the sidelines ahead of this week�s Federal Reserve testimony on monetary policy. Prices have fallen nearly 1 percent so far this month, failing to build on June�s modest gains as the Fed dampened speculation it was set to announce a fresh round of stimulus measures.
Spot gold was down 0.1 percent at $1,588.81 an ounce at 1425 GMT, having earlier dipped as low as $1,578.29. Prices have stayed in a $1,525-1,675 range for the last three months, awaiting clearer direction on US monetary policy. �(Gold) will remain rangebound in wider ranges until Aug 1 when the FOMC announces its next policy steps,� VTB Capital analyst Andrey Kryuchenkov.
�(This week) Bernanke will leave the door open to QE3, but he is likely to reiterate that so far it is not warranted, even though the growth momentum has somewhat slowed down in Q2.�
Fed chair Ben Bernanke will present his semi-annual monetary policy report to Congress on Tuesday and Wednesday against a background of soft growth at home and a festering euro zone debt crisis that is increasingly worrying US policymakers.
A voting member of the Federal Reserve�s policy-setting body, Dennis Lockhart, said on Friday he had edged closer to supporting another round of quantitative easing if the economy floundered. However another regional bank president reiterated that he saw no need for additional Fed easing.
Further monetary easing would maintain pressure on long-term interest rates, keeping the opportunity cost of holding gold at rock bottom, as well as weighing on the dollar.
�Right now, after the latest (Fed) meeting at the end of June and the disappointment there, I�m not pricing in any QE3 factor before the US elections,� LGT Capital Management analyst Bayram Dincer said.
US gold futures for August delivery were down $3.00 an ounce at $1,589.00.
European stocks fell on Monday, extending losses after the retail sales numbers, with buyers reluctant to push the market higher as the early stages of a second-quarter earnings season brought signs the euro zone crisis is hurting profits.
Safe-haven German Bund futures rose, remaining the investment of choice for those seeking shelter as yields rose on bonds issued by Spain and Italy, which are struggling to retain confidence that they can keep financing their debts while reining in deficits.
The correlation between the dollar and gold stood at -0.68 in early trade, steady from Friday and the strongest inverse correlation in nearly three months.
�Macro developments and policy expectations are likely to continue driving the gold market for the remainder of 2012, and so it�s more of the same for gold as we have seen in recent months,� UBS said in a note.
�Clear signs of deterioration in the global economy are needed for the market�s expectations of policy response to accelerate, which in turn would lift gold prices.�
Among other precious metals, silver was down 0.3 percent at $27.21 an ounce. Holdings of the largest silver-backed ETF, the iShares Silver Trust, fell by 33.2 tonnes on Friday, their biggest one-day drop since the start of July. Spot platinum was down 0.6 percent at $1,413.25 an ounce and spot palladium was down 0.8 percent at $574.25 an ounce.�Reuters
Investors largely stuck to the sidelines ahead of this week�s Federal Reserve testimony on monetary policy. Prices have fallen nearly 1 percent so far this month, failing to build on June�s modest gains as the Fed dampened speculation it was set to announce a fresh round of stimulus measures.
Spot gold was down 0.1 percent at $1,588.81 an ounce at 1425 GMT, having earlier dipped as low as $1,578.29. Prices have stayed in a $1,525-1,675 range for the last three months, awaiting clearer direction on US monetary policy. �(Gold) will remain rangebound in wider ranges until Aug 1 when the FOMC announces its next policy steps,� VTB Capital analyst Andrey Kryuchenkov.
�(This week) Bernanke will leave the door open to QE3, but he is likely to reiterate that so far it is not warranted, even though the growth momentum has somewhat slowed down in Q2.�
Fed chair Ben Bernanke will present his semi-annual monetary policy report to Congress on Tuesday and Wednesday against a background of soft growth at home and a festering euro zone debt crisis that is increasingly worrying US policymakers.
A voting member of the Federal Reserve�s policy-setting body, Dennis Lockhart, said on Friday he had edged closer to supporting another round of quantitative easing if the economy floundered. However another regional bank president reiterated that he saw no need for additional Fed easing.
Further monetary easing would maintain pressure on long-term interest rates, keeping the opportunity cost of holding gold at rock bottom, as well as weighing on the dollar.
�Right now, after the latest (Fed) meeting at the end of June and the disappointment there, I�m not pricing in any QE3 factor before the US elections,� LGT Capital Management analyst Bayram Dincer said.
US gold futures for August delivery were down $3.00 an ounce at $1,589.00.
European stocks fell on Monday, extending losses after the retail sales numbers, with buyers reluctant to push the market higher as the early stages of a second-quarter earnings season brought signs the euro zone crisis is hurting profits.
Safe-haven German Bund futures rose, remaining the investment of choice for those seeking shelter as yields rose on bonds issued by Spain and Italy, which are struggling to retain confidence that they can keep financing their debts while reining in deficits.
The correlation between the dollar and gold stood at -0.68 in early trade, steady from Friday and the strongest inverse correlation in nearly three months.
�Macro developments and policy expectations are likely to continue driving the gold market for the remainder of 2012, and so it�s more of the same for gold as we have seen in recent months,� UBS said in a note.
�Clear signs of deterioration in the global economy are needed for the market�s expectations of policy response to accelerate, which in turn would lift gold prices.�
Among other precious metals, silver was down 0.3 percent at $27.21 an ounce. Holdings of the largest silver-backed ETF, the iShares Silver Trust, fell by 33.2 tonnes on Friday, their biggest one-day drop since the start of July. Spot platinum was down 0.6 percent at $1,413.25 an ounce and spot palladium was down 0.8 percent at $574.25 an ounce.�Reuters
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