Gold edged lower on Monday, after rising by nearly 2 percent in the previous session, as funds were seen cutting bullion holdings for better investment yields in riskier assets such as equities.
Reuters report yesterday showed that spot gold dropped 0.4 percent to $1,575.26 an ounce by 1406 GMT. On price charts the metal looked vulnerable to re-test a 10-month low of $1,539.70 hit last week, analysts said. U.S. gold futures for June delivery were little changed at $1,576 an ounce.
“It seems that today we have risk-on sentiment in the market which can explain the weakness in gold prices,” Commerzbank analyst Carsten Fritsch said.
“Prices still look vulnerable in the short term after the huge drop to the lowest in ten months last week and that level could be tested again this week given continued outflows out of gold ETFs and bearish short-term investor market positioning.”
European equities clawed back some of the previous session’s hefty losses, as investors snapped up the beaten-down complex, shrugging off concerns about Portugal’s ability to keep its bailout programme on track. U.S. shares, however, opened slightly lower, failing to follow gains elsewhere in the world.
Gold had climbed nearly 2 percent on Friday, the biggest gain since November, after data showed U.S. employers hired at the slowest pace in nine months in March, backing expectations the Federal Reserve would sustain a bullion-boosting monetary stimulus programme.