Gold gave back an early rally on Monday morning, trading below Friday's close of $1190 an ounce on what one Hong Kong dealer called "a typically slow summer day."

"There is physical gold buying coming in as prices are below $1200," said a Seoul-based trader.

"Physical demand is supporting the market towards the $1185 level," said Afshin Nabavi of MKS Finance in Geneva, also speaking to Bloomberg.

"A lot of the interest we are seeing at the moment is from long-term investors, and we don't see that abating," the Wall Street Journal quotes Barclays Capital analyst Suki Cooper in London.

Dealing in Asian and European equities was also quiet early Monday, leaving London's FTSE100 index unchanged from last week's two-month closing high.

Crude oil slipped from an 11-week high near $79 per barrel. Major-economy government bonds rose, nudging the yield offered by 10-year US debt back below 3.00%.

Platinum and palladium both hit a 5-week high, some 3.6% and 13% higher for 2010-to-date respectively.

Silver Prices slipped back from an early repeat of Friday's one-week high at $18.33 an ounce, but held above $18 an ounce – some 6.6% higher for the year so far – as the start of US dealing approached.

"In technical terms, gold looks bearish," says Walter de Wet at Standard Bank. "However, in the physical market, buying interest is providing support around this crucial range gold."

Looking at the latest Commitment of Traders data from the US Gold Futures market, non-commercial "speculative" players last week cut their bullish position to the equivalent of 639 tonnes net long, de Wet says, "the lowest level since March this year.

"As a percentage of [all] open interest, the non-commercial net long position now stands at 25.5% – the lowest level since Nov 2008. We therefore foresee more gold longs."

Over on the currency markets on Monday, the Euro held steady against the Dollar around $1.29, but the British Pound jumped once again, challenging 5-month highs above $1.55.

Nomura bank analysts in New York say in a new report that central banks added a record $24.5 billion of "other" currencies to their portfolios between Jan. and April – meaning currencies outside the Dollar, Euro, Sterling or Japanese Yen.

Typically led by the "commodity Dollars" of Canada and Australia, Norway's "petro" Krone, plus the higher-yielding New Zealand Dollar, these "other" currencies accounted for 3.7% of central-bank reserves worldwide by April, Nomura thinks, up from 1.5% a decade ago.

Gold Bullion has gone from 12.2% of central-bank reserves in 2000 to 10.0%, according to World Gold Council research.

Following last week's upbeat European banking "stress test" results, in which only 7 out of 91 institutions now need to raise extra capital, "Current news is not indicating an inflation threat and the sovereign debt-crisis is gradually vanishing from public attention," says Wolfgang Wrzesniok-Rossbach in his latest Precious Metals Weekly for German refinery Heraeus.

"If the Indian gold merchants also sit back in August, Western investors will again have to get active. [But] demand for investment Gold Bars in mid-Europe in the last ten days has been again at a low level, and the relatively low prices in Euro terms have not had much effect on this.

"Here in Europe, scrap-gold supplies [have] continued to flow at unchanged (robust) levels."

Today the Gold Price in Euros bounced higher after re-touching Friday's 3-session low of €29,500 per kilo.

Luxembourg's Commerzbank notes that, on the World Gold Council's data – compiled by London consultancy GFMS Ltd – the supply of "scrap" gold from unwanted jewelry worldwide fell 43% in the first quarter of this year from the start of 2009, down to 343 tonnes.

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