* Speculators raise longs for gold first time in 3 weeks
* Palladium drops back from 7-week highs hit on Friday
By Sethuraman N R
Oct 3 Gold edged lower on Monday on a firmer
dollar and a gain in equities, with the yellow metal losing its
safe-haven appeal as concerns about Deutsche Bank's health
Spot gold was down 0.1 percent at $1,315.06 an ounce
as of 0740 GMT, while U.S. gold futures rose 0.1 percent
Deutsche Bank is trying to reach a settlement
with U.S. authorities demanding a fine of up to $14 billion for
the misselling of mortgage-backed securities.
"With the news that Deutsche Bank is going to be settling at
around $5 billion dollars, it is going to be taken fairly
positive by the market as we had seen a lot of selling in the
equities on Friday," said Jeffrey Halley, senior market analyst
Gold is sidelined at the moment as "everything seems to have
calmed down substantially including Deutsche Bank and OPEC
production cuts," Halley said.
OANDA sees gold trading sideways between $1,315 and $1,325
an ounce for now, he said.
The absence of top consumer China, where markets are shut
from Oct. 1-9 for the Chinese National Day holidays, is expected
to keep trading volumes low.
"We see no major investor enthusiasm for gold and prices may
have to ease to test the $1,300-$1,310 level before support
materializes," said HSBC analyst James Steel in a note.
"Gold's best near-term chance of a rally would more likely
come from an oil surge or a deterioration of the financial
situation in Europe," Steel said.
U.S. consumer spending fell in August for the first time in
seven months, while inflation showed signs of accelerating,
mixed signals that could keep the Federal Reserve cautious about
raising interest rates.
Positive data usually puts pressure on gold prices, because
investors raise bets on a U.S. interest rate hike that would
increase the opportunity cost of holding non-yielding bullion.
Hedge funds and money managers raised their net long
positions in COMEX gold for the first time in three weeks in the
week to Sept. 27.
Holdings of the SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, fell 0.13 percent to 947.95
tonnes on Friday.
Silver fell 0.2 percent to $19.12 an ounce,
platinum slipped 0.3 percent to $1,020.80, and palladium
was down 0.2 percent at $718 after touching a seven-week
high on Friday.
(Reporting by Nallur Sethuraman and Swati Verma in Bengaluru;
Editing by Richard Pullin and Tom Hogue)