Gold regained some lost territory from the previous session on Monday supported by a weaker dollar, but easing concern about Greece's debt crisis has diminished gold's appeal as a safe haven in the short term. Gold dipped below the key support level of $1,500 in the last session, and faces strong headwinds in the short term, traders and analysts said.
"After Greece passed the austerity measures, market participants will need to find another reason to buy into gold," said Ong Yi Ling, an analyst at Phillip Futures. "But right now it's hard to find a catalyst for gold prices to push higher." The price outlook for the rest of the year however remains bullish, supported by the wobbly economic recovery in the United States, uncertainties in the eurozone's fiscal health, and high inflation in major fast-growing economies like China and India, analysts said. Spot gold gained half a percent to $1,492.89 an ounce by 0559 GMT, after losing 1 percent in the previous session.
US gold rose 0.7 percent to $1,493.40 an ounce. Technical analysis also pointed at lack of momentum, suggesting that gold may end its weak rebound below $1,500 and resume a preceding fall towards $1,472, said Wang Tao, Reuters market analyst. "There is small buying interest in Asia, but nothing game-changing," said a Hong Kong-based dealer, "The gold market will be taking cues from the euro and oil, which are giving some upside support to bullion." Gold is likely to be rangebound between $1,470 and $1,520 in the next few days, he added.
Managed money sharply cut their bullish bets in COMEX gold futures and options, as bullion prices tumbled, futures regulator Commodity Futures Trading Commission data showed Friday. Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, dropped to two-week low of 1,205.809 tonnes by July 1. Activity was thin as the US financial markets are closed for a public holiday on Monday.
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