Spot Gold Prices slipped against the US Dollar early Monday, opening the week in London just shy of last week's start around $671 per ounce as global equity markets rose in response to fresh injections of cash from the world's leading central banks.

"Despite the recent sell off in gold from fund managers attempting to raise capital to cover margin calls on loss making positions in their portfolios, the yellow metal should bounce back and react positively given the amount of cash being fed into the global markets," says today's note from Standard Bank.

The Bank of Japan today put another ¥600 billion into Tokyo's money market, helping the Nikkei stock index to end the day 0.2% higher. The broader Topix index, however, slipped to a new 8-month low as banking stocks fell further and economic growth was reported at just 0.5% annualized between April and June, way below the first quarter's 3.2% rate.

The injection of Yen came as the lack of willing lenders worldwide pushed Tokyo's overnight call rate above the Bank of Japan's current 0.5% target. In Frankfurt this morning, the European Central Bank then injected €47.67bn into the Eurozone money markets, its third special operation since Thursday, offering "quick tender" on cash lent at 4.06%, just above its current target rate.

In the stock market, the FTSE Eurofirst 300 index leapt 1.3% higher in the first half of trading, and Wall Street futures turned higher. Professional investors now await the first official comments on the global liquidity crunch from monetary policymakers, and will watch to see if the US central bank adds to Friday's injection of $38 billion into the US money market. The Federal Reserve has already pledged further funds "as necessary".

"People are more interested in gold in case the Fed does something more dramatic if the market does deteriorate a little bit more," reckons Caesar Bryan, a manager at GAMCO Gold Fund in New York. Noting the metal's $17 leap in response to Friday's cash injection by the Fed, "gold should do well" he believes.

"Gold was further aided on Friday by market rumors that the Fed will convene at an emergency meeting, possibly as early as this week, to discuss the possibility of reducing interest rates from 5.25% to 4.75% next month," says the note from Standard Bank.

"Should this happen it would be a fair bet that other central banks such as the Bank of England and ECB would follow suit and ease monetary policy to give the markets time to recover."

In the Gold Market itself, "the general public on [Japan's] Tocom were good sellers overnight," reports the London note from Mitsui today, "capping any attempt at a rally in gold. The $676.50 level has been providing good resistance to the market. However, with the Indian demand season a few days away, and the Middle East returning from their holidays, look for dips in the Gold price to be supported."

Physical demand for jewelry manufacture is set to pick up by the start of Sept. as the Hindu festival and Indian wedding seasons return to India. Meantime, "since physical demand is still weak in August, we might see gold trailing other markets such as equities," says Ma Qianyu, a gold trader at Bank of China in Shanghai, to Bloomberg.

In the currency markets, the Euro continued to slip versus the Dollar, taking the cross below $1.3650. Down nearly 1.4% from this time last week, the falling currency helped the Euro Price of Gold recover Friday's close above €491 per ounce just ahead of the US open.

The British Pound also continued its decline against the Dollar, dropping below $2.0100 for the first time in five weeks on news that input prices for UK manufacturers rose only 0.1% annualized in July, down from June's 2.3% rate. That took the Sterling Price of Gold more than £1 higher for the session to break £333.50 per ounce.

Inflation data from China, however, suggests further price pressure ahead. Hitting a ten-year high of 5.6% last month, China's domestic inflation "is the result of faster growth above capacity and vast liquidity inflows," reckons Stephen Green of Standard Chartered Bank in Shanghai.