Spot gold regained lost ground early on Monday, as bargain hunting trickled in after prices dropped about 1 percent in early trade in response to China's interest rate increase on Saturday. Spot gold slipped $2.85 an ounce to $1,381.40 by 11:46 am EST (1646 GMT), sticking within the narrow range of the past two weeks after this year's over 26 percent rally to a series of record highs began to run out of steam.
US gold futures pulled back from a 0.4-percent decline to rise by 0.14 percent to $1,382.40. "Gold continues better even though China raised rates as at the same time they now have a program allowing retail accumulation of gold-retail sales...and as some people look at treasuries again lower rates mean cheaper holding of gold is possible," said George Gero of RBC Wealth Management.
With liquidity reduced both by London holidays on Monday and Tuesday as well as a massive snowstorm in the US eastern seaboard that disrupted New York area transit, most financial markets saw thin trade and small moves. Spot gold is technically neutral as it is rangebound between $1,360 and $1,392 per ounce, but the bias seems to be with the bulls, Reuters market analyst Wang Tao said.