Gold prices steadied in Europe, silver up 0.7 percent at $28.88 an ounce
Gold prices steadied in Europe on Monday as a retreat in the dollar took some early selling pressure off the metal, with trading cautious ahead of a meeting between the French and German leaders on the euro zone economy later in the day.
Spot gold was little changed at $1,617.29 an ounce at 1110 GMT versus $1,616.98 late in New York on Friday, up from an earlier low of $1,604.44. U.S. gold futures for February delivery were up $1 an ounce at $1,617.90.
While confidence in gold’s ability to revisit last year’s record high above $1,920 an ounce was shaken by a 10 percent price drop in December, rock-bottom interest rates and concerns over debt levels and growth remain supportive, analysts said.
“It’s hard to point to any negative factors for gold,” said Saxo Bank senior analyst Ole Hansen. “Speculative length can be increased quite a bit as it is relatively low, and the dollar could be positioned for a bit of weakening — euro short positioning rose to another record last week.”
“We have the (Merkel-Sarkozy) meeting today,” he added. “Quite often ahead of these meetings, markets tend to be a bit hesitant of getting too carried away (in case) new initiatives are announced. On that basis, we see the potential for a bit more of a pullback on the dollar. That should be supportive (for gold).”
The meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy later will focus on ways to boost growth and finalize details of a deal to increase fiscal coordination in the euro zone.
The euro recovered from the 16-month low it hit against the dollar on Monday to rise 0.2 percent ahead of the talks, but worries over sovereign funding kept investors bearish. A softer dollar tends to benefit gold.
Money managers cut their net length in gold futures and options for a third straight week as the price of bullion fell to its lowest in nearly six months, U.S. Commodity Futures Trading Commission figures showed on Friday.
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