SINGAPORE |
(Reuters) - Gold edged lower on Monday after posting its biggest rally
in more than three years in the previous session, when dismal U.S. jobs
data fuelled speculation about further monetary easing and burnished
gold's appeal as a hedge against inflation.
The surprisingly weak U.S.
employment data added to the gloom over the global economy, just as the
euro zone appears to be sinking deeper into the debt crisis and China's
growth slows.
Gold broke ranks with
riskier assets on Friday and rose 4 percent , propped up by rekindled
expectations of further monetary easing by the U.S. Federal Reserve.
Asian
investors, however, were less than convinced that the Fed would
implement monetary easing soon, and were selling at the higher prices to
lock in profits.
"People are still not sure where things may go and have been selling after prices jumped," said a Singapore-based dealer.
Spot gold edged down 0.3 percent to $1,621.40 an ounce by 0321 GMT. It had fallen to as low as $1,614.59 earlier in the session.
U.S. gold futures contract for August delivery was little changed at $1,623.
The London financial markets are closed on Monday and Tuesday for a public holiday.
Bullion
fell more than 6 percent in May, under the weight of a dollar that
rallied more than 5 percent as investors piled into the greenback, U.S.
Treasuries and German Bund during a deepening euro zone crisis.
But
if the U.S. recovery falters as well, gold will have a chance to shine
once again as a safe haven as investors look for alternatives.
"The
immediate drive is to move to Treasuries and Bund. But why would you
want zero return on the Bund while you can buy gold? Gold still has
value," said Jeremy Friesen, commodity analyst at Societe Generale in
Hong Kong.
Net long positions in
U.S. gold futures and options inched up by seven contracts to 77,325
contracts in the week ended May 29, after declining for three weeks
straight, said the U.S. Commodity Futures Trading Commission.
Net long positions in silver eased 2 percent to 4,912 contracts, the lowest since November 2008, the CFTC data also showed.
Spot
silver lost 0.8 percent to $28.41, after rallying 3.6 percent on Friday
- its biggest one-day rise in more than three months.
(Editing by Miral Fahmy)
