Gold futures in New York settled a touch lower on Monday on end-of-the-month book squaring, after bullion prices were pressured in lackluster, rangebound trade in Europe, market sources said. A weaker dollar and firm crude price failed to give gold much of a lift, as the metal consolidated in a familiar band and dealers grabbed some profits following gains last week.
Benchmark December delivery gold slid $1.00 to end at $646.80 an ounce at the COMEX division of the New York Mercantile Exchange, after dealing from $651.50 to $640.50.
Jon Nadler, an analyst with bullion dealer Kitco, said gold resumed its recent nervous trading pattern on the final day of July as investors closely watched other markets and international headlines for direction.
"We may have a very interesting month of trading ahead. Look for volatility and the occasional surprise move in an otherwise fairly confined range," he said in a note.
War in the Middle East, doubts over US interest rate rises, and projections for physical gold buyers to return to the market by late August remained in the background, he said.
"You are probably going to be bordered between $639 and $650 an ounce in gold for the short-term," commented James Quinn, commodities commentator at AG Edwards & Sons, from the floor of the COMEX. It was first notice day for metal delivery in COMEX August gold. That contract shed 60 cents to end at $634.20.
Estimated volume just before the close was a mere 25,000 contracts against 81,916 lots on Friday. Open interest in COMEX gold futures rose 6,361 lots to 315,910 lots.
Civilians fled battered villages in southern Lebanon on Monday after Israel said it would halt its air strikes, but the Jewish state pledged to step up its offensive to root out Hizbollah guerrillas. US Secretary of State Condoleezza Rice said a cease-fire to end the 20-day-old conflict could be forged this week, but Israel rejected any immediate truce.
Spot gold was quoted at $634.70/635.45 an ounce, off from Friday's late New York quote at $635.40/636.40. Monday's afternoon bullion fix in London was at $632.50. "While conditions remain for a possible investor-led, and probably short-lived, return to levels over $700 before year-end, there are more substantial grounds for prices to drift sideways to down over the year," Natexis Commodity Markets said in a report.
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