* Fed, ECB meetings in spotlight this week
* Spot gold due for correction - technicals
* Coming up: euro zone business climate, July; 0900 GMT
By Rujun Shen
SINGAPORE, July 30 Gold held steady above $1,620
per ounce on Monday, as investors wait for the central banks on
both sides of the Atlantic to give clearer cues on the potential
for further monetary stimulus.
Last Friday's data showed U.S. economic growth slowed in the
second quarter as consumers spent at their slowest pace in a
year, increasing pressure on the Federal Reserve to do more to
bolster the recovery ahead of its policy meeting later in the
Ambiguity on another round of quantitative easing, known as
QE3, has held gold in a seesawing pattern over the past two
months. More monetary easing would raise inflation outlook and
benefit gold, seen as a hedge against rising prices.
But some analysts expect the Fed to stick to the line that
the economy has not deteriorated sufficiently for the central
bank to intervene.
"I don't see the Fed drastically changing its rhetoric on
QE3 at this week's meeting," said Li Ning, an analyst at
Shanghai CIFCO Futures. "Technically, gold is poised for some
correction after last week's rally, as there is still quite a
bit of pressure at the $1,640 level."
Spot gold was little changed at $1,621.32 per ounce
by 0538 GMT, after posting a 2.5 percent weekly gain on Friday,
its biggest one-week rise in nearly two months. It hit $1,629.10
in the previous session, the highest since early June.
The U.S. gold futures contract for August delivery
inched up 0.2 percent to $1,620.70.
Gold has drifted between $1,530 and $1,640 over the past two
Technical analysis suggested that spot gold was due to
correct to $1,608 per ounce during the day, said Reuters market
analyst Wang Tao.
The higher prices triggered some selling in the physical
market in Asia, dealers said.
"We've seen scrap come out from Indonesia and Thailand as
prices moved up," said a Singapore-based dealer, adding that the
gold bar premium was steady around 80 cents per ounce above
Investors will also closely watch the policy meeting of the
European Central Bank on Thursday, after the bank's chief Mario
Draghi's pledge last week to do everything necessary to protect
the euro zone fuelled expectations for more accommodative policy
ETF HOLDINGS DECLINE
In contrast to the buoyant sentiment in the gold market in
recent sessions, inventor interest in exchange-traded gold
products was on the decline.
Holdings of SPDR, the world's biggest gold-backed
exchange-traded fund, have been falling for a month and dropped
to 1,248.606 tonnes on Friday, the lowest level since early
Hedge funds and money managers trimmed their net long
positions in U.S. gold futures and options by about 25 percent
in the week ended July 24, data from the U.S. Commodity Futures
Trading Commission showed.
Precious metals prices 0538 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1621.32 -1.52 -0.09 3.68
Spot Silver 27.65 -0.08 -0.29 -0.14
Spot Platinum 1403.75 1.10 +0.08 0.77
Spot Palladium 573.25 1.05 +0.18 -12.15
COMEX GOLD AUG2 1620.70 2.70 +0.17 3.44 4944
COMEX SILVER SEP2 27.62 0.12 +0.43 -1.07 1474
COMEX gold and silver contracts show the most active months
(Editing by Chris Lewis)