Gold eases after failing to breach $1,600 an ounce

Mon May 21, 2012 4:23pm EDT
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By Josephine Mason

NEW YORK (Reuters) - Gold prices slipped on Monday after early buying failed to lift prices past $1,600 an ounce, with investors still cautious about the precious metal as they awaited clearer signals on the euro-zone debt crisis.

Last week, gold slid to its lowest level since December, then rallied 4.5 percent late in the week. Buying resumed early on Monday but ran out of steam, as mild technical selling set in around the session high of $1,599 an ounce -- gold's priciest level in a week and a half.

Spot gold was down 0.08 percent at $1,590.80 an ounce at 3:43 p.m. EDT (1910 GMT), while U.S. gold futures for June delivery settled at $1,588.70 per ounce, down 0.2 percent from Friday.

A close above $1,605 an ounce would trigger significant buying, traders said, but after last week's tumultuous trading, most investors are content to just buy the dips for now.

The precious metal remains poised for a rebound after touching a triple bottom last week on the technical charts, said Ralph Preston, futures analyst at HeritageWest Futures in San Diego, California.

Last week, gold fell to its lowest this year at $1,527 an ounce, before staging its biggest two-day rally since October as traders holding short positions rushed to cover.

Simmering concerns about the euro zone debt crisis have stoked some demand for physical metal as a safe store of value in Europe, dealers said, but bad news from the euro zone also largely weighs on gold via its impact on the currency markets.

On Monday, gold did not track the euro, which staged its own technical rebound against the dollar after falling to four-month lows late last week. <FRX/>   Continued...

Jewellery is displayed at a shop that buys gold in the Ginza district of Tokyo August 23, 2011. Spot gold sells now for $1,830 an ounce, up nearly a third this year. With currencies and stocks faltering and prices of other commodities held back by slowing economic growth, the frenzy for gold has gone global. Many are cashing in on the gold they have at home the trend is slowing in the belief prices will rise further. Picture taken August 23, 2011. REUTERS/Toru Hanai