Gold ticked lower in London on Monday in what one dealer called "very quiet" trade, nearing Friday's 8-session low beneath $1190 an ounce as the US Dollar reversed last week's late gain against the Euro and world stock markets pushed higher.
Gold Trading in Asia was also "lazy" according to one local dealer, with Tokyo closed for Japan's Marine Day holiday.
Crude oil crept back above $76 per barrel as broad commodity markets ticked higher, but Silver Prices dropped 10 cents to $17.80 an ounce.
Major-economy government bonds slipped back, nudging the 10-year yield offered by US, German and UK debt up to 2.95%, 2.65% and 3.36% respectively.
"Despite its sharp declines [on Friday] the Gold Price managed to hold its recent low and thus remains entrenched in its $1218/$1185 range for the time being," says one London trader in a note.
"Traditionally July and August have been quiet months for gold, but we do not think any pull back in the short term will be substantial, because of the current uncertainty in the macroeconomic outlook," says Tony Yousefian, a manager at London's OPM multi-manager funds group, speaking to UK trade magazine Investment Week and forecasting an 11% gain for gold buyers by end-2010.
Short term, "Price direction is probably down for this week and gold will spend more time around $1180 and $1190 levels," reckons analyst Robin Bhar at Credit Agricole, also in London.
"Prices looked overbought and everybody was very long gold."
Speculative traders in the US Gold Futures market cut their bullish "long" betting for the third week running in the week-to-last-Tuesday, new data from the CFTC regulator showed late on Friday.
Cutting their holdings of bearish "short" contracts faster still, however, Gold Trading hedge funds, private investors and other speculative players grew their "net long" position (of bullish minus bearish bets) by the equivalent of 10 tonnes to 862 tonnes.
Down 15% in 3 weeks, that compares with a 5-year average of 693 tonnes.
On the other side of the trade, meantime, the so-called "smart money" of commercial traders (acting for miners, refiners and bullion banks) extended their "net short" position, but only by 1.2%.
As a proportion of all bullish or bearish contracts open last Tuesday, the commercial sector's net short crept up to its long-term average of 35.6%, just above the previous week's 19-month low.
"We remain encouraged by the positive response from the gold physical market to what was only a marginal decline in the Gold Price," says today's commodity note from South Africa's Standard Bank analysts.
"With interest rates low and sovereign debt problems high, the investment case for gold is still intact [and] we expect it to remain healthy throughout 2010."
After the International Monetary Fund and European Union pulled out of reviewing their joint €19.4 billion rescue package for Hungary on Saturday – blaming Budapest's new banking tax and weak "austerity" measures – the sovereign debt of Ireland was today downgraded one notch to Aa2 by the Moody's rating agency, albeit with a "stable outlook".
The Euro jumped regardless, gaining 1¢ to trade within spitting distance of Friday's 11-week high against the Dollar at $1.30.
The single currency also re-touched Friday's 11-week high against gold, driving the Gold Price in Euros back below €29,500 per kilo.
Gold priced in Pounds Sterling was flat below £780 an ounce.
"Every single person out there should own some gold," said celebrity analyst and money manager Jim Cramer to his CNBC viewers on Friday, noting the start of what he believes to be a traditional summer sale in the metal.
"We have an uncertain world. If the economy over-heats people like gold. If the economy's weak people buy gold. If we get chaos people like gold.
"There are going to be days when gold goes down, but you must have at least a tenth of your portfolio in gold. I love to buy it on weakness."
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