Gold eased a touch on Monday to hover below $940 after gaining the previous session, and traders said it may stay below that level as there was little to drive trade in Asian market hours. A dealer based in Hong Kong said there was some small local buying earlier in the session, but that it had fizzled out at about $940.
"It seems like we haven't got much of a lead," he said, referring to stocks and currency markets. Spot gold was down 0.4 percent to $935.60 an ounce as of 0239 GMT from New York's notional close on Friday.Bullion has so far moved between $933.85 and $941.75.
Japan's Nikkei average fell 1.5 percent on Monday, after booking a four-month closing low the previous trading day, hurt by automakers such as Honda Motor amid worries about the fate of General Motors. Fund managers say prices could hold around current levels due to weak jewellery demand and as short-term traders take profits after a sharp rally that pushed gold above an 11-month high above $1,000 an ounce on February 20.
This is not far from a record of $1,030.80 hit last March. The precious metal edged higher on Friday as stocks reversed initial gains but trade was choppy after payrolls data showed the US economy shed more than half a million jobs in February. Fund activity has remained fairly quiet since last week despite the roughly $20 rise in price.
Waning interest in gold was also highlighted by a decline in holdings of gold-backed exchange traded funds. The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings eased to 1,028.99 tonnes as of March 8, down 0.3 tonne from the record 1,029.29 tonnes that was first hit on February 26.
This marked the first decline since early January. Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong, said consumers have become very cautious about buying at this level with no end yet in sight to the economic downtrend. "Consumer buying is very minimal," he said.
High prices and the economic downturn have battered Abu Dhabi's gold market, cutting retail sales by more than 70 percent on the year in February, the Gulf emirate's gold and jewellery group chairman said on Sunday. The dollar dipped against the yen and euro on Monday as investors trimmed safe-haven buying of the greenback after last week's US payrolls data showed that job losses were less severe than many had feared.
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