Gold steadies in London

Gold prices steadied on Monday, having earlier fallen in line with the euro, stocks and other commodities like crude oil, as buyers were tempted back to the market by the metal's retreat towards $1,760 an ounce. Spot gold was at $1,770.09 an ounce at 1439 GMT against $1,772.19 late on Friday, having earlier slipped as low as $1,761.76 an ounce. US gold futures for April delivery were down $6.00 an ounce at $1,770.40.
The metal has risen more than 13 percent so far this year and analysts are upbeat about its prospects on expectations that monetary policy will remain loose in key economies, cutting the opportunity cost of holding non-yielding bullion. "I would think that buyers who missed the move higher last week stepped in as we approached $1,760, as longs would have a relatively high risk-reward, with a stop below $1,750 and a target of $1,800," said Ole Hansen, vice-president at Saxo Bank.
"Fireworks would erupt on a break below $1,750 this week, as many new longs has been established above this level." The precious metal struggled to maintain traction above $1,780 an ounce last week after rising more than 3 percent, its best weekly performance since late January.
It remains under some pressure from losses in other assets. Shares fell on Monday and the euro slipped 0.6 percent against the dollar as investors worried about energy costs hurting global growth, and after the Group of 20 leading economies told Europe it must commit more money to fight the debt crisis before seeking their help.
The debt crisis that has engulfed the euro zone in recent years was initially positive for gold, fuelling interest in the metal as a haven from risk. In recent months better news on the crisis has benefited gold, however, as it tracks the euro higher, although the relationship remains patchy. "Gold's correlation with the euro - while still positive - has... weakened to the lowest level in almost a month," said UBS in a note. "The easing of correlations should help shield gold if a negative surprise emerges from the euro zone in the coming week or so."
Recent upward momentum in oil prices, which rose to 10-month highs on Friday on the back of the Iran crisis, has also raised concerns over economic growth, analysts said. Prices fell more than $1 a barrel on Monday as investors cashed in gains. In a note, technical analysts at Standard Chartered said that while a rise through gold's November peak at $1,802 would open up the path to revisit last year's record high, short-term momentum indicators are bearish. It sees support at $1,705.
"The rally is extending, but we favour resistance at $1,802 an ounce to continue to cap near-term upticks," they said. Gold's retreat from 10-week highs fuelled a demand recovery in major consumer India, a notoriously price-sensitive market, on Monday. "Gold is slightly off last week's high, a rupee close to 49.00 (is) attractive and the market's view (is for) prices to further go up," said a dealer with a private bank in Mumbai.
But dealers in Tokyo said supply of scrap gold to the market rose after Japanese-yen denominated gold rose to its highest since last September, with monetary easing measures from the Bank of Japan pressuring the yen. In New York, money managers, including hedge funds and other large speculators, raised their bullish bets in gold to the highest level in five months during the week of February 21, as prices snapped back from their February lows, US Commodity Futures Trading Commission (CFTC) data showed.
Among other precious metals, silver was down 0.3 percent at $35.18 an ounce. Spot platinum was down 0.5 percent at $1,699.49 an ounce, while spot palladium was down 1.2 percent at $701.22 an ounce. South Africa's Impala Platinum is to rehire thousands of miners sacked for an illegal strike that has halted production for more than a month at the world's biggest platinum mine, a leading union said on Saturday. The strike fuelled a near 5 percent rally in platinum prices last week, taking them to their highest since September at $1,731.50.