Gold slips below $1,630 per oz as euro falls
By Jan Harvey
(Reuters) - Gold prices slid below $1,630 an ounce on Monday as concerns that the euro zone debt crisis could ensnare higher-rated countries hurt the single currency, though moves were muted ahead of this week's Federal Reserve meeting.
The metal is extending the 2 percent losses it has posted so far this month, in line with a drop in the euro. The currency has come under heavy pressure from growing fears over the ability of some euro zone countries, particularly Spain, to manage debt.
Spot gold was down 0.7 percent at $1,629.69 an ounce at 7:53 a.m. EDT (1153 GMT), while gold futures for June delivery were down $11.80 an ounce at $1,630.90.
"We are basically caught between two opposing factors," Credit Suisse analyst Tobias Merath said.
"On the one hand, we have U.S. bond yields coming off, which adds some support, but concerns over Europe are capping the upside, because the situation in Europe has the potential to lead to deteriorating liquidity conditions."
"As we saw at the end of last year, gold is a hedge against all kinds of crises, but not against a liquidity problem, when people are liquidating assets to raise much-needed cash. They also sell gold in this environment."
Prices will struggle to break out of their current range without fresh drivers, he said.
Gold watchers are turning their attention to the Federal Reserve's two-day policy meeting from Tuesday, at which the prospect of more monetary easing is set to be addressed. Continued...