Gold falls in Europe

Gold fell on Monday as news that the US authorities have charged Goldman Sachs with fraud hurt commodities but lifted the dollar, though it recovered from two-week lows as some investors sought the metal as a haven. Goldman Sachs was charged on Friday with fraud by the US Securities and Exchange Commission over its marketing of a subprime mortgage product, sparking an immediate slide in assets seen as higher risk, like equities and commodities.
Spot gold hit a two-week low of $1,123.15 and was bid at $1,134 an ounce at 1457 GMT, against $1,136.45 late in New York on Friday. Commodities tumbled across the board on Friday after the news, and most extended those losses on Monday. Oil fell more than 2 percent and copper slid to three-week lows.
"After prices dropped in a knee-jerk reaction following the (Goldman news), the chart picture for gold deteriorated further," said Eugen Weinberg, an analyst at Commerzbank. He said gold may be vulnerable to further losses. "The dollar is stronger, (and) gold has been correlated with equities and other commodities positively recently," he said. US gold futures for June delivery on the COMEX division of the New York Mercantile Exchange fell to $1,134.50 an ounce.
Nonetheless, gold has recovered from its earlier lows, as some investors were attracted by the metal's appeal as a safe store of value. "Gold is a safe haven," said Citigroup analyst David Thurtell. "It did fall $20-30, but it has held up relatively well."
Currency effects also weighed on gold, as the dollar strengthened broadly. Rising risk aversion weighed on higher yielding currencies like the euro, with lingering concerns over Greece's debt levels also pressuring the single currency.
"In the near term, we expect the developments surrounding Goldman to overshadow all other issues that previously dominated gold trading, including the pace and tempo of the economic recovery and its impact on monetary policy (and) the possibility of a CNY revaluation," said HSBC in a note. On the physical side of the gold market, holdings of the world's largest bullion exchange-traded fund, New York's SPDR Gold Trust, held at record levels on Friday.
However, a rapid rise in speculative net long positions in New York gold futures is worrying some analysts. "As we enter a new week, particularly following a negative weekly close, the focus of investor positioning in the gold market comes further under the spotlight," UBS analyst Edel Tully said in a report on Monday.
"There is little doubt that such positioning is bordering on crowded," she said. "So long as risk aversion remains in place, the danger is that gold longs will run for the exit as fast as they entered over the previous two weeks." However, a price drop linked to a liquidation among speculators may attract more physical investors back to the market, she noted.
Other precious metals declined or traded flat in line with gold, with silver bid at $17.68 an ounce against $17.67. Holdings of the largest silver ETF, the iShares Silver Trust, fell another 45.74 tonnes on Friday, bringing their total decline this year to 580 tonnes, or 6 percent. Platinum was at $1,686.50 an ounce against $1,690, while palladium was at $527.50 against $528.50.