Gold ticked lower on Monday after earlier rising to its
highest in more than seven weeks as investors awaited the outcome of Greece's
debt deal talks, but a slower-than-expected growth in the United States underpinned
EU leaders, which will sign off on a permanent rescue fund for
the euro zone on Monday, are expected to agree on a balanced budget rule in
national legislation, but unresolved problems in
Greece cast a shadow on the discussions.
Gold hit a high of $1,739 an ounce, its strongest since Dec 8,
on safe-haven buying after data showed US fourth-quarter economic growth was
weaker than expected though it grew at its fastest pace in 1-1/2 years.
By 0232 GMT, gold stood at $1,732.89 an ounce, down $4.31.
Bullion, which struck a record around $1,920 last
September on concerns about a worsening euro zone debt
crisis, is on track for a more than 10 percent gain this month.
"If the retreat-rally pattern seen in the past two
quarters continues, gold could well rise to $1,780 an ounce by early March,"
said Nick Trevethan, a senior commodity strategist at ANZ in Singapore.
"Chinese physical activity was more or less absent last
week. These prices may look high to Chinese buyers after gold jumped almost 5
percent whilst they were away. We'll be watching physical flows to see whether
China will chase the rally or sit back and see if the market comes back to
The spot deferred gold contract on the Shanghai Gold Exchange
added 14.34 yuan a gram to 353.15 yuan as trading resumed after the Lunar New
US February gold was steady at $1,733.20 an ounce.
The euro hovered at six-week highs against the dollar on Monday,
but trading was slow as investors awaited confirmation that Greece has secured
a long-awaited debt deal that will help it avert a messy default.
Prime Minister Lucas Papademos sought backing on Sunday from
leading Greek party leaders for painful and unpopular reforms that the
near-bankrupt country must negotiate now that a long-awaited debt relief deal
seems almost secured.
Gold, typically a
safe-haven asset, has been tracking the fortunes of the euro and stocks, with
speculators selling the metal for cash
to cover losses in other markets, especially during this period of uncertainty
Gold also got a boost from reports the world's biggest hedge
fund, Bridgewater Associates, was bullish on bullion as a hedge against
inflation as governments print more money to reduce debt.
"There's a small amount of buying from China, but
there's also profit taking in the market. The price has gone up so much,"
said a dealer in Hong Kong.
"I think people are waiting for US data this week such
as non-farm payrolls and employment rate. We have yet to find if Greece will
able to solve its debt problems."
In the energy market, US crude oil steadied above $99 a barrel
on Monday, supported by the shutdown of oil production in South Sudan and
concerns that OPEC member Iran could soon halt its exports.
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