Gold edged slightly higher on Monday after posting its biggest quarterly loss on record, as investors await key economic data this week for clues on when the Federal Reserve could taper its economic stimulus.
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Spot gold rose 0.2 per cent to $US1236.39 an ounce in morning trade, extending a 3 per cent rebound rally on Friday, while Comex gold rose about $US13 to $US1236.40.
Gold fell nearly 25 per cent for the April-June period, its worst quarterly performance since 1968, on fears over an early ending to the Fed's bond buying programme. The metal fell below $US1200 an ounce last week for the first time in nearly three years.
Some investors aggressively bought back their bearish bets on fears gold could rebound, while others squared their books on the last trading day of a dismal second quarter after Thursday's 2 per cent drop as funds polished portfolios through the practice of window-dressing.
"You've seen an over-run on the downside here. I am not positive that this is the low but we are very close to it," said John Hummel, AIS Group's chief investment officer.
Spot gold was up 2.2 per cent at $US1226.46 an ounce in late New York trade, rebounding sharply from a low of $US1180.71 an ounce, which marked the cheapest price since August 2010. Friday's rise was the metal's biggest one-day gain since May 20.
Mark Arbeter, chief technical strategist at S&P Capital IQ, said: "It will take months for gold to trace out a potential bullish reversal formation because of the severe technical damage."
Thursday's slide to below $US1200 an ounce for the first time in three years has prompted nervous investors to buy put options to hedge against further losses. US Comex gold futures for August settled up $US12.10 at $US1223.70 an ounce, with trading volume at around 310,000 lots, nearly 50 per cent its 30-day average.
Bullion has taken a beating - losing as much as 15 per cent or about $US200 an ounce - since the beginning of last week when Federal Reserve chairman Ben Bernanke laid out a strategy to roll back the bank's $US85 billion monthly bond purchases in a recovering economy.
After a spectacular surge in physical demand after a $US200 two-day dive in April, dealers and jewellers said consumers across the world are reluctant to buy even after the latest price decline.
With one day left in the month, sales of the US Mint's American Eagle gold coins in June stand at only 47,000 ounces, a fifth of what was sold in all April, when sales hit a 3-1/2 year high. Silver Eagles sales are down 20 per cent.
Investors, not individuals, are likely to hold the key for prices in the second half. The world's eight largest gold ETFs lost 530 tonnes of gold in the first half of 2013, equivalent to about 10 per cent of annual gold production.
Among other precious metals, silver rose 5.9 per cent to $US19.53, rebounding sharply from a near three-year low at $US18.19 an ounce.
Reuters
