Gold prices eased a touch in holiday-thinned trade yesterday as investors took bets on higher prices off the table, disappointed by a lack of clear guidance from the Federal Reserve on Friday on the options for US economic stimulus.
The metal lifted from early lows, however, and steadied after last week's extreme volatility, as speculation grew that the Fed may announce a fresh round of quantitative easing next month. The same talk lifted stocks and weighed on the dollar.
Spot gold was down 0.7 per cent at $1,815.10 (Dh6,666.95) an ounce at 0935 GMT, having earlier slipped as low as $1,806.29. Prices slid more than $200 late last week from their early peak at a record $1,911.46 an ounce, dropping towards $1,700.
"Gold recovered strongly after the wild swings during the week, and after a lot of weak longs were flushed out and with speculative long positions still being reduced, it has now got room to the upside," said Saxo Bank senior manager Ole Hansen.
However, until we see additional news from the economies and the banking situation in Europe it will most likely settle into a wide range in the days ahead."
The sharp sell-off last week was a reminder that markets never move in a straight line, and it will probably slow down, but not stop, further progress to the upside," he added.