US MIDDAY: gold down

Gold prices eased slightly on Monday as concerns that the European debt crisis will hurt global growth kept the euro under pressure, though the precious metal pulled up from early lows as the single currency pared losses against the dollar. Spot gold edged down to $1,593.79 an ounce at 1330 EST (1830 GMT) from $1,598.75 at Friday's finish. Earlier, it fell to $1,582.84 as worries about further eurozone debt rating downgrades lifted the dollar.
The metal has seen decent physical buying since falling to a near 12-week low last week, European dealers said. It went on to post its biggest one-week loss since late September as the dollar benefited from concerns over the eurozone debt crisis. While investors remain cautious, a recovery from those lows, particularly to back above the precious metal's 200-day moving average around $1,620 an ounce, could trigger more buying.
"I think gold investors could be lurking in the wings if we get a good move back above (there)," Saxo Bank senior manager Ole Hansen said.
"The break last week has kept the market under some pressure but with no follow-through it could set the stage for some technical short-covering, which would trigger additional buying from investors." Gold in recent months has been closely correlated to riskier assets as a funding squeeze forced investors to dump gold to cover losses elsewhere. Confidence in the precious metal remains fragile after a weak fourth quarter so far, with spot prices on track to post their first quarterly loss in more than three years.
Money managers in gold futures and options cut bets on higher prices for a second consecutive week as gold prices fell sharply, the latest data from the US Commodity Futures Trading Commission showed.
Demand for physical metal in the world's biggest gold consumer, India, was subdued on Monday as buyers postponed purchases in anticipation of bigger fall in prices, dealers said. Lower prices were tempting some European buyers, however. Analysts say gold may be vulnerable to further losses towards the end of the year and in early 2012, with no end yet in sight to the eurozone debt crisis and some improvement expected in the US economy, which should support the dollar.
However, gold's underlying appeal as a hedge against currency market instability, an official sector reserve asset and as a store of wealth in emerging economies is expected to prevent too steep a correction, they add. Even after last week's correction, spot gold prices remain up 12.9 percent from the beginning of the year.
US gold futures for February delivery were down $1.70 an ounce at $1,596.20. Among other precious metals, silver was down 2.50 percent at $28.86 an ounce, having fallen nearly 8 percent last week in gold's wake. Spot platinum was down about 0.35 percent at $1,406 an ounce, while spot palladium was off 0.78 percent at $614.72 an ounce.