Gold Steady after last week -3% slide

Gold steadied above two-month lows on Monday, following its largest weekly fall last week in three months, as evidence of investor and central bank demand in recent weeks helped offset the negative impact of a weaker euro.

Spot gold was up 0.1 percent on the day at $1,654.90 an ounce by 1124 GMT, having fallen by more than 3 percent last week.

Investors have become more confident in the prospects for the U.S. economy after three weeks of consistently upbeat data, which have prompted some reassessment of the rate outlook and removed some of the desire to hold gold as insurance against another slowdown.

The resulting steep rise in benchmark 10-year U.S. Treasury yields, which supports the dollar, has weighed on gold. Gold’s correlation to Treasury prices has turned positive in the past two weeks, meaning that it is more likely to move in the same direction as U.S. bond prices.

Speculators cut their holdings of gold futures to their lowest in two months last week, according to data on Friday, although longer-term investors did not follow suit, as evidenced by the rise last week in holdings of gold in exchange-traded products to another record high.

Reuters

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