Spot gold fell more than 1 percent on Monday, reversing a rally of 3.2 percent in the previous session, as investors faced with uncertainties over the US Federal Reserve's stimulus plans decided to take some money off the table. US Federal Reserve Chairman Ben Bernanke on Friday stopped short of detailing further action to boost the economy but said the central bank would consider what more it could do to fight high unemployment.
"The market didn't really get much insight as to what the Fed may or may not do," said Darren Heathcote, head of trading at Investec Australia. "It is an opportunity to take some profit off the table after the run-up, given that we are not going to get anything from the Fed for a while." Cash gold fell as much as 1.2 percent to $1,806.29 an ounce and stood at $1,815.06 by 0629 GMT. Prices lost more than 1 percent last week, snapping seven straight weeks of gains. US gold gained 1.2 percent to $1,818.
Technical analysis suggested spot gold could rise to $1,838.29 on Monday, Reuters market analyst Wang Tao said. Speculators cut their long positions in US gold futures and options last week for a third straight week even as bullion prices shot up above $1,900, data from the US Commodity Futures Trading Commission showed. Echoing the cut in longs in futures and options, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, recorded an outflow of nearly 60 tonnes last week, its largest weekly outflow since the fund was launched in November 2004.
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