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PRECIOUS-Gold edges down, pauses after EU deal rally
July 2, 2012 / 4:09 AM / 5 years ago

PRECIOUS-Gold edges down, pauses after EU deal rally

* Gold retreats with euro, oil after Friday rally
    * Spot gold may end retracement at $1,586/oz - technicals
    * Coming Up: Euro zone Markit Mfg PMI, June; 0758 GMT

 (Adds comments; updates prices)
    By Rujun Shen
    SINGAPORE, July 2 (Reuters) - Gold prices edged down on
Monday, taking a breather after a 3-percent rally in the
previous session, as the initial euphoria over a euro zone deal
to help its debt-laden members gave way to caution over its
effectiveness.
    Spot gold posted its biggest one-day rally in a month on
Friday after euro zone leaders agreed to bend their aid rules to
shore up banks and bring down the borrowing costs of countries
like Italy and Spain, in a sign that the bloc is adopting a more
flexible approach to solving its debt crisis.  
    But the euphoria ebbed when markets opened on the first
trading day of the quarter, with the euro and oil sliding, as
investors question to what extent the deal will help tackle the
crisis.  
    "These were small steps and the time frame to get some of
these things done is long, so I wouldn't be surprised if the
market takes a pause," said Jeremy Friesen, commodity strategist
at Societe Generale in Hong Kong.
    Spot gold edged down 0.3 percent to $1,591.64 an
ounce by 0628 GMT. The precious metal posted a monthly gain of
more than 2 percent in June, its first rise in five months. 
    U.S. gold futures contract for August delivery lost
0.7 percent to $1,592.40.
    
    Investors are eyeing the manufacturing surveys for euro zone
nations later in the day, after recent downbeat manufacturing
data from China and Japan heightened concerns about the health
of the global economy. The U.S. consumer confidence fell to a
six-month low in June.    
    The uncertainty around Europe will continue to weigh on
markets, but central banks and policymakers are likely to take
more accommodative stance in the second half of the year to help
the economic recovery, Friesen said.
    Economic and political turmoil usually drive investors to
seek safety in gold, but bullion has largely moved in tandem
with riskier assets since late last year due to the tight credit
conditions caused by the euro zone debt crisis.
    So long as the uncertainty in Europe remains, gold may
remain under pressure despite the expected easing from central
banks, Friesen added.
    "Rate cuts could spark a rally in gold, but if there is
still uncertainty, credit conditions could remain tight which
would hold gold down."
    Money managers slashed their net long positions in U.S. gold
futures and options by 20 percent in the week ended June 26, the
first decline in five weeks. 
    But holdings of gold-backed exchange-traded funds
 edged up last week, showing unflinching interest
in gold from some investors.    
    "The market still lacks conviction on where prices should
go, and precious metals are stuck here," said a Singapore-based
dealer.
    
      Precious metals prices 0628 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1591.64   -5.35   -0.34      1.78
  Spot Silver        27.28   -0.20   -0.73     -1.48
  Spot Platinum    1432.25   -9.45   -0.66      2.82
  Spot Palladium    577.13   -1.00   -0.17    -11.55
  COMEX GOLD AUG2  1592.40  -11.80   -0.74      1.63        12320
  COMEX SILVER SEP2  27.28   -0.34   -1.22     -2.29         3249
  Euro/Dollar       1.2619
  Dollar/Yen         79.57
  COMEX gold and silver contracts show the most active months
 
 (Editing by Himani Sarkar)

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