Gold prices fell in early trade in New York on Monday, as the political deadlock in Greece fuelled risk aversion and put pressure on the euro. Spot gold prices was down $15.83 to $1,563.60 an ounce, after earlier hitting a session low of $1,556.61 an ounce, its lowest since December 30.
Gold has moved in tandem with riskier assets this year as the turmoil in Europe sent the euro to multi-month lows and investors turned to the safety of the dollar, analysts said. "Gold is under severe pressure. The US dollar is being seen as a safe haven at the moment and as long as the dollar is appreciating against the euro this is clearly weighing on the gold price," said Daniel Briesemann, analyst at Commerzbank.
Concerns about the euro zone crisis resurfaced after coalition talks in Greece hit an impasse on Sunday and Greece's radical leftist leader spurned an invitation from the president for a final round of talks on Monday, all but ensuring another election next month.
The euro fell to its lowest in nearly four months against the dollar, which rose against a basket of currencies. A strong dollar makes commodities priced in the US unit more expensive for holders of other currencies. Also weighing on sentiment for the precious metal, money managers in gold futures and options cut their net long positions by 20 percent to the lowest level since December 2008, as investors aggressively unwound their bullish bets in the precious metal after a sharp price pullback. US gold for June slipped 1.5 percent to $1,561 an ounce.
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