Gold rose in Asia on Monday, breaking $649.50 per ounce, before settling $2 lower – back where it closed last week – just before London opened for business.

Volumes appear light after the frantic action of last week. "We saw some buying from the Japanese," said a Bank of China gold dealer in Hong Kong earlier. "But I can say there's not much business...just a little bit of buying."

The dip in Asia was more pronounced in Dollar terms than against other currencies. British gold buyers began this week £2 better off from last Monday, above £330 per ounce.

"People believe the bull market is still intact," reckons Jonathan Barratt, managing director of Sydney-based Commodity Broking Services in Sydney. "We should start to trend higher...

Twenty-one out of 33 traders, investors and analysts surveyed around the world by Bloomberg last Friday advised buying gold. Four said sell. Eight were neutral.

"Crude oil certainly will be one support [for] gold," says Barratt, "and I think that is why you might see gold test back up through the $653 area and maybe even onwards and upwards...

"With oil trading where it is and staying above this $59 level, we should get some inflationary sort of feeling back to the market."

Gold last week shot higher to break $645 – seen as a key level on the Dollar charts by technical analysts – before racing above $660 per ounce, a 7-month high.

Friday's sharp sell-off knocked gold 1.4% lower, but it was only to be expected – especially with many metals funds losing money on copper and zinc right now. Last Friday also saw a slew of data on the US economy, taken as positive for the US Dollar by traders despite slower employment growth.

"The data available from the US economy for the last couple of weeks says the outlook remains bullish for the service sector on strong consumer demand and signals of a stabilising domestic real estate market," reckons Pradeep Unni, analyst at Vision Commodities Services DMCC in Dubai.

Today's non-manufacturing index, however – due at 15:00 GMT – is expected to come in lower than last month.

Currency traders will also be watching events this week at the G7 summit in Essen, Germany. Finance leaders from the world's top 7 industrial nations are meeting to discuss, amongst other things, the plummeting value of the Japanese Yen.

"Japan is unfairly manipulating [the Yen]," according to one US senator. But the greatest pressure on the Japanese currency right now comes from the international currency markets themselves.

Data released Friday shows a record "short" position in the Yen held by speculators betting via the US futures and options exchanges. Right on cue, the Japanese Yen has turned higher today. It's the only major world currency to have gained value versus gold since the start of last week.

What's been driving the Yen's historic collapse – and what might a rise in the Yen mean for Western investors holding gold? Click here to read more now...